(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 $90,000 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: 5 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 EAC at a discount rate of 10% is $ (Round to the nearest cent.) i X - Data Table Year Alternative A Alternative B 0 1 2 $(90,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) $(55,000) (4,000) (4,000) (4,000) 3 4 5 6 7 (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 $90,000 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: 5 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 EAC at a discount rate of 10% is $ (Round to the nearest cent.) i X - Data Table Year Alternative A Alternative B 0 1 2 $(90,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) $(55,000) (4,000) (4,000) (4,000) 3 4 5 6 7