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You are operating an old machine that is expected to produce a cash inflow of $7,000 in each of the next 3 years before it

You are operating an old machine that is expected to produce a cash inflow of $7,000 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $22,000 but is much more efficient and will provide a cash flow of $13,000 a year for 4 years.

Calculate the equivalent annual cost of the new machine if the discount rate is 16%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) THE ANSWER IS NOT 5,137.75

Equivalent annual cost of the purchase price:

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6 You are operating an old machine that is expected to produce a cash Inflow of $7,000 in each of the next 3 years before it fails. You can replace it now with a new machine that costs $22,000 but is much more efficient and will provide a cash flow of $13,000 a year for 4 years. Calculate the equivalent annual cost of the new machine if the discount rate is 16%. (Do not round Intermediate calculations. Round your answer to 2 decimal places.) 7.5/15 points awarded Equivalent annual cost of the purchase price $ 5,137.75 X Scored eBook Should you replace your equipment now? References Yes No

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