1) If the interest rate is 6%, what is the Equivalent Annual Cost (EAC) of the following machine:

Cost: $7,000 Life:

8 years Annual cost to operate:

$4,000

Answer to 2 decimal places, for example 970.12

2) Your company needs to be a new machine. Given the choice between Model A and Model B, which should you choose and why? The interest rate is 13%.

	A	B
Cost	$4,000	$7,000
Life	4 years	6 years
Annual Cost to operate	$900	$1,100

Group of answer choices

A) A, because its annual cost is about $600 less than B

B) B, because its annual cost is about $400 less than A

C) B, because its annual cost is about $600 less than A

D) A, because its annual cost is about $400 less than B