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Problem 1 A machine has a first ( capital ) cost of $ 1 4 , 0 0 0 . The repair costs are covered
Problem
A machine has a first capital cost of $ The repair costs are covered by the warranty in
year then they increase by $ per year. Assume an interest rate of
a Calculate the EAC for the first years of the machine's use, rounding to the nearest dollar.
b Identify the minimum EAC for this machine, and the year it occurs.
c Based on this value, according to the techniques we have learned, how many years should
the machine be used before it is sold?
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