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Office Automation Inc must choose between two copiers, the XX40 or the RH45. The XX40 costs $2,300 and will last 5 years. The copier will
Office Automation Inc must choose between two copiers, the XX40 or the RH45. The XX40 costs $2,300 and will last 5 years. The copier will require a real aftertax cos of $260 per year after all relevant expenses. The RH45 costs $2,800 and will last 7 years. The real aftertax cost for the RH45 will be $235 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 5% per year, and the nominal rate is 14%. Calculate the EAC for each copier. Please show your work.
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