Problem 6-26 EAC and Inflation

Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $1,900 and will last for 4 years. The copier will require a real aftertax cost of $220 per year after all relevant expenses. The RH45 costs $2,400 and will last 6 years. The real aftertax cost for the RH45 will be $195 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 6 percent per year, and the nominal discount rate is 13 percent.

Calculate the EAC for each copier. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))

	EAC
XX40	$
RH45	$

Which copier should the company choose?

	XX40
	RH45