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Question 5 (22 points) Your company would need a moulding machine for manufacturing. You are evaluating the following two options. Option 1: Your company can

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Question 5 (22 points) Your company would need a moulding machine for manufacturing. You are evaluating the following two options. Option 1: Your company can lease a moulding machine for 4 years at a cost of $370,000 per year. Option 2: Your company can buy a moulding machine at a cost of $600,000, with annual maintenance expenses of $90,000 and annual operating cost of $120,000. The moulding machine will depreciate to zero on a straight-line basis. The machine has a 4 years life and will have a salvage value of $240,000 at the end of its life. If the tax rate is 30% and the discount rate is 10%, compute the equivalent annual cost (EAC) of Option 2, i.e. buying the moulding machine. Which option would you prefer

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