At i = 10% per year, a machine has a first cost of $10,000 and estimated operating costs and year-end salvage values as shown.

The annual equivalent cost if you operate the machine for 4 years is closest to which value?

Determine the economic service life.

Years	Operating COst $/yr	Salvage Value $
1	-1000	7000
2	-1000	5000
3	-1000	4200
4	-1000	3000
5	-1000	2000