Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine?

Initial cost $245,000

MARR 18% p y c y Inflation rate 6% p y c y

Life 7 years

Project life 10 years

Machine value today with life of 3 years $76,500

Machine value today with life of 7 years $143,500

First year costs $65,200

First year benefits $140,800

A $20,896 B $24,876 C $28,678 D $32,865