Question
Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $1,100 and will last for 3 years. The copier
Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $1,100 and will last for 3 years. The copier will require a real aftertax cost of $140 per year after all relevant expenses. The RH45 costs $1,600 and will last 5 years. The real aftertax cost for the RH45 will be $115 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 5 percent per year, and the nominal discount rate is 14 percent.
Calculate the EAC for each copier. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
EAC | |
XX40 | $ |
RH45 | $ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started