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TMI is considering purchasing an equipment for its production. The initial cost of the machine Is $859,910. The equipment costs $7,805 a year to operate.

TMI is considering purchasing an equipment for its production. The initial cost of the machine Is $859,910. The equipment costs $7,805 a year to operate. The equipment has a life of 6 years before it is replaced. What is the equivalent annual cost of this equipment if the required return is 9.48%.

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