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You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $8,600 and is expected to run for 6 years; Model B is more expensive, with a price of $15,100, and has an expected life of 10 years. The annual maintenance costs are $840 for Model A and $690 for Model B. Assume that the opportunity cost of capital is 10 percent. Calculate equivalent annual costs (EAC) of each models. (Do not round the discount factor. Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.) EAC of Model A is $ 2717.11 EAC of Model B is $ 3185.26 Which one should you buy? You should buy Model A - Given the soaring price of gasoline, Ford is considering introducing a new production line of gas-electric hybrid sedans. The expected annual unit sales of the hybrid cars is 36,000; the price is $23,000 per car. Variable costs of production are $9,000 per car. The fixed overhead including salary of top executives is $80 million per year. However, the introduction of the hybrid sedan will decrease Ford's sales of regular sedans by 10,000 cars per year; the regular sedans have a unit price of $20,000, a unit variable cost of $12,000, and fixed costs of $250,000 per year. Depreciation costs of the production plant are $46,000 per year. The marginal tax rate is 40 percent. What is the incremental annual cash flow from operations? Incremental annual cash flow from operations $ ta