1.) You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a three-year life, and has pretax operating costs of $71,000 per year. The Techron II costs $460,000, has a five-year life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $48,000. If your tax rate is 34 percent and your discount rate is 8 percent, compute the EAC for both machines.

Techron I $

Techron II $

Which machine do you prefer?

Techron II

Techron I