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(Related to Checkpoint 11.2) (Calculating EAC) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations
(Related to Checkpoint 11.2) (Calculating EAC) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm's new plasma cutter shop. The two alternatives, denoted A and B below, will perform the same task, but alternative A will cost $80,000 to purchase, while alternative B will cost only $55,000. Moreover, the two alternatives will have very different cash flows and useful lives. The after-tax costs for the two projects are as follows: a. Calculate each project's EAC, given a discount rate of 10 percent. b. Which of the alternatives do you think Barry should select? Why? a. Alternative A's EA) at a discount rate of 10% is $ (Round to the nearest cent.) Data table Year Alternative A Alternative B 01234569 $(80,000) $(55,000) (20,000) (6,000) (20,000) (6,000) (20,000) (6,000) (20,000) (20,000) (20,000) 7 (Click on the icon in order to copy its contents into a spreadsheet.) (20,000) Print Done -
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