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Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $ 1 0 million. The system

Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $10 million. The system will last 5 years. Do-lt-Right sells a sturdier but more expensive system for $16 million; it will last for 8 years. Both systems entail $1 million in operating costs; both will be depreciated straight-line to a final value of zero over their useful lives;
10
neither will have any salvage value at the end of its life. The firm's tax rate is 30%, and the discount rate is 15%.
points
a. What is the equivalent annual cost of investing in the cheap system?
Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 2 decimal places.
b. What is the equivalent annual cost of investing in the more expensive system?
Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 2 decimal places.
c. Which system should Blooper install?
Answer is complete but not entirely correct.
\table[[a. Equivalent annual cost,$,1.94ox,millions],[b. Equivalent annual cost,$,2.13aleph,millions],[c. Which system should Blooper install?,Quick and Dirty,,]
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