Budget Co operates in an industry which has recently been deregulated as the government seeks to increase competition in the industry.

Budget Co plans to replace an existing machine and must choose between two machines that will reduce the GHG emissions. Machine $1$ has an initial cost of $$200,000$ and will have a scrap value of $$25,000$ after four years. Machine $2$ has an initial cost of $$225,000$ and will have a scrap value of $$50,000$ after three years. Annual maintenance costs of the two machines are as follows:

$\backslash$table$[[$Machine $1($$ per year$),25,000,29,000,32,000,35,000],[$Machine $2($$ per year$),15,000,20,000,25,000,]]$

Where relevant, all information relating to this project has already been adjusted to include expected future inflation. Taxation and tax allowable depreciation must be ignored in relation to Machine $1$ and Machine $2.$

Budget Co has a nominal before$-$tax weighted average cost of capital of $11\%$ and a nominal afterlax weighted average cost of capital of $7\%.$

What is the equivalent annual cost of Machine $1?$

$$ $$80,412$

$$88,505$

$$83,388$

$$72,609$

$$75,609$

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