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    Equivalent annual cost

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    A polisher costs $10,000 and will cost $20,000 a year to operate and maintain. If the discount rate is 10 percent and the polisher will last for 5 years, what is the equivalent annual cost of the tool?

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    Solution Preview

    In order to calculate the equivalent annual cost (EAC), we first find the PV of all costs
    The ...

    Solution Summary

    The solution explains how to calculate the equivalent annual cost