A machine costs Rs. 20000 and its useful life is 8 years. The money is borrowed at 8% interest per annum. The capital recovery factor at 8% interest per annum for 8 years is 0.174. The annual equipment cost of the machine will be A. Rs. 1740 B. Rs. 3480 C. Rs. 5220 D. Rs. 6960

The correct answer is A. Rs. 1740.

The annual equipment cost of the machine is the annual amount of money that must be paid to recover the cost of the machine, including interest. This can be calculated using the capital recovery factor (CRF), which is a factor that takes into account the interest rate and the number of years of the loan.

In this case, the CRF is 0.174, the interest rate is 8%, and the number of years is 8. Therefore, the annual equipment cost of the machine is:

Annual equipment cost = CRF * Cost of machine / (1 – (1 + CRF)^-n)

= 0.174 * 20000 / (1 – (1 + 0.08)^-8)

= 1740

The other options are incorrect because they do not take into account the CRF.