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Excel please! Your company is considering purchasing one of two machines: Machine A costs $2,600,000 and will last for six years. Variable costs are 35%
Excel please!
Your company is considering purchasing one of two machines: Machine A costs $2,600,000 and will last for six years. Variable costs are 35% of sales and fixed costs are $195,000 per year. Machine B costs $5,200,000 and will last for nine years. Variable costs are 30% of sales and fixed costs are $230,000 per year. Your sales, regardless of the machine used will be $10 million per year. Your required return is 10% and your tax rate is 35%. Both machines will be depreciated straight line to zero over its useful life. Both machines will have a salvage value at the end of its life of 10% of the original purchase price. Calculate the EAC for both machines and determine which machine should be chosenStep by Step Solution
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