Question
Data for two machines is as shown below: Machine X Machine Y Initial Cost $125,000 $195,000 Life 6 12 Salvage 12% 12% First year cost
Data for two machines is as shown below:
| Machine X | Machine Y | |
| Initial Cost | $125,000 | $195,000 |
| Life | 6 | 12 |
| Salvage | 12% | 12% |
| First year cost | $12,000 | $15,000 |
| Increase in cost per year | $1,000 | $1,000 |
| Rate (p.y.c.y.) | 5% | 5% |
Which of the following statements is TRUE if the price of Machine X is estimated to remain the same over the foreseeable future?
| A. | The EUAC for both the machines is the same. | |
| B. | The EUAC of X is greater than that of Y by $3,600. | |
| C. | The EUAC of X is less than that of Y by $3,600. | |
| D. | The EUAC for the machines cannot be determined based on the information provided. |
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
11th edition
324422870, 324422873, 978-0324302691
