Question
Hilton Hotels is considering the purchase of a commercial-grade robotic vacuum cleaner for their hotels. They are ready to run a trial in a large
Hilton Hotels is considering the purchase of a commercial-grade robotic vacuum cleaner for their hotels. They are ready to run a trial in a large urban hotel and have narrowed the choice to two models. The Schneider X1000 has a cost of $2,100, generates no additional revenue and has annual electricity and maintenance cost of $400. It can be depreciated straight-line over its five-year expected life. At the end of its life, it is expected to have a salvage value of just $100. The GE B1 is less expensive and costs just $1,800, but has an expected live of only three years and a zero salvage value. Its annual electricity and maintenance expense is also $400. The expected salvage value is zero. It could be depreciated straight-line over its 3-year life. Hilton has a required rate of return of 12% and a tax rate of 30%. What is the EAA of the Schneider X1000? Do not include a "$" in your answer, but do include a negative sign if appropriate.
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