A New Machine,with a 4-Year Life,has an Initial Cost of $1,200

Multiple Choice

A new machine,with a 4-year life,has an initial cost of $1,200 and annual costs of $380.The equivalent annual cost of this machine is best described as the

A) 4-year annuity payment that has the same net present value as the project's costs given a stated discount rate.
B) 4-year total of all costs divided by four.
C) annual sales needed to offset these additional costs.
D) lump sum payment at Time 0 that is equal to these additional costs at a given discount rate.
E) 4-year average after-tax cash flow resulting from the annual costs.