The General Mills Company (GMC) purchased a milling machine for $100,000, which it intends to use for the next five years. This machine is expected to save GMC $35,000 during the first operating year.
Then the annual savings are expected to decrease by 3% each subsequent year over the previous year due to increased maintenance costs.
Assuming that GMC would operate the machine for an average of 3,000 hours per year and that it would have no appreciable salvage value at the end of the five-year period, determine the equivalent dollar savings per operating hour at 14% interest compounded annually.