Ok here is some info from the IDF, Israeli Defense Forces. One of the only military forces to have used both the AK47 and M16. They even tried using their own assault rifle, the IMI Galil, similar to the AK47 and they chose the M16 over it.
http://www.isayeret.com/weapons/assault/m16vsak47.htm
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To summarize, the IDF chose the M16 over the AK47/Gail because the M16 is the better assault rifle in all parameters that matter. As for reliability, the M16 is reliable enough. As for cost it's a non issue. Buying weapons today is cheap. In fact, for modern armies who buy large sums, most optical sights cost much more then assault rifles per unit.
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