I do not understand how they calculated the estimated annual cost (EAC) can you please write out how they calculated that and also how would you solve for EAC on a financial calculator??

You are evaluating two different silicon wafer milling machines. The Techron I costs $237,000, has a three-year life, and has pretax operating costs of $62,000 per year. The Techron Il costs $415,000, has a five-year life, and has pretax operating costs of $35,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $39,000. If your tax rate is 34 percent and your discount rate is 8 percent, compute the EAC for both machines. (Your answers should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) -98,095.05 $ Techron I Techron II $ -94,432.12 Which machine should you choose? Techron II Techron! Explanation We will need the aftertax salvage value of the equipment to compute the EAC. Even though the equipment for each product has a different initial cost, both have the same salvage value. The aftertax salvage value for both is: Aftertax salvage value = $39,000(1 - 34) Aftertax salvage value = $25,740 To calculate the EAC, we first need the OCF and NPV of each option. The OCF and NPV for Techronis: OCF = -$62,000(1-34) +.34($237,000/3) OCF = -$14,060 NPV = -$237,000 - $14,060 (PVIPA34,3) + ($25,740/1.083) NPV = -$252,800.74 EAC --$252,800.74/(PVIFA34,3) EAC = - $98,095.16 And the OCF and NPV for Techron II is: OCF = -$35,000(1 - 34) +.34($415,000/5) OCF = $5,120 NPV = -$415,000 + $5,120 (PVIFA34,5) + ($25,740/1.085) NPV - -$377,039.11 EAC - -$377,039.11/(PVIFAg4,5) EAC = -$94,431.88 The two milling machines have unequal lives, so they can only be compared by expressing both on an equivalent annual basis, which is what the EAC method does. Thus, you prefer the Techron Il because it has the less negative annual cost