Country breads uses specialized ovens to bake its bread. one oven costs $249,000 and lasts about 15 years before it needs to be replaced. the annual operating cost per oven is $34,300. what is the equivalent annual cost of an oven if the required rate of return is 14 percent?

(a) -$74.839.43
(b) -$48,349.72
(c) -$82,800.19
(d) $50,560.08
(e) -$28,729.77

The equivalent annual cost of an oven is

Explanation:

Hi

Known Data

Operating cost=, and

Computing total cost per year

We are going to use the formula below with the known data.

. Then this is the fixed amortization cost per year.

Finally, we sum the fixed amortization cost per year and the operating cost:

Total cost per year=, therefore the answer is  

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