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Problem 6-26 EAC and Inflation Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $2,500 and will last
Problem 6-26 EAC and Inflation Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $2,500 and will last for 6 years. The copier will require a real aftertax cost of $280 per year after all relevant expenses. The RH45 costs $3,000 and will last 8 years. The real aftertax cost for the RH45 will be $255 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 13 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 Which copier should the company choose? RH45 XX40
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