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A piece of machinery costs $7,500 and has no salvage value after it is installed. The...

A piece of machinery costs $7,500 and has no salvage value after it is installed. The manufacturer’s warranty will pay the first year’s maintenance and repair costs. In the second year, maintenance costs will be $900, and they will increase by $900 in subsequent years. Also, operating expenses for the machinery will be $500 in the first year and will increase by $400 in the following years. If interest rate is 8%, find economic life of the machinery and the associated equivalent annual cost.

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