Hunter Brothers Inc. needs to buy printers for its offices. It can buy expensive laser printers or much cheaper (but shorter-lived) inkjets. Here is the relevant info: A laser printer costs $1,000 today (Year 0) and an inkjet costs $250 today. A laser printer has an anticipated life of 6 years, but an inkjet has an anticipated life of only 2 years. Both will have no salvage value at the end of their lives. The annual operating costs of each printer depend on the number of pages printed. The cost per page of the laser printer is $0.03 per page. The cost per page of the inkjet is $0.10 per page. The firm plans to print 10,000 pages per year. For simplicity, assume that the variable operating costs of printing occur at the end of each year of the printers life. The two machines are mutually exclusive. If the firm bases its decision on the Equivalent Annual Cost (EAC) method, which will it buy? Assume a discount rate of 12%.

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