An upgraded version of a CNC machine has a first cost of $200,000, an annual operating cost of $60,000, and a salvage value of $50,000 after its 8-year life. At an interest rate of 10% per year, the capitalized cost is closest to:
(a) $?93,116
(b) $?100,060
(c) $?931,160
(d) $?1,000,600
AW = -200,000(A/P,10%,8) – 60,000 + 50,000(A/F,10%,8)
= -200,000(0.18744) – 60,000 + 50,000(0.08744)
= $-93,116
CC = -93,116/0.10
= $-931,160
Answer is (c) $?931,160
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