Two machines are being considered to do a certain task. Machine A costs $24 000 new and $2 600 to operate and maintain each year. Machine B costs $32 000 new and $1 200 to operate and maintain each year. Assume that both will be worthless after eight years and that the interest rate is 5.0 percent. Determine by the equivalent uniform annual cost method which alternative is the better buy.
What will be an ideal response?
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