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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 for
(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 $65,000 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 11 percent b. Which of the alternatives do you think Barry should select? Why? a. Alternative A's EAC at a discount rate of 11% is s (Round to the nearest cant i Data Table . D Year Alte Alternative B 0 1 2 3 $(65,000) (7.000) (7.000) (7.000) $(90000) (19.000) (19.000) (19,000) (19.000) (19.000) (19,000) (19,000) 4 5 6 7 Print Done 202
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