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Rufr Motors needs to select an assembly line for producing thelr new SUV. They have two options. - Option A is a Mighly automaied assembly
Rufr Motors needs to select an assembly line for producing thelr new SUV. They have two options. - Option A is a Mighly automaied assembly line that has a large up. front cost but low maintenance cost over the years. This option will cost $8 million loday with a yearly eperating cost of $2 million. The assembly line will last for 5 years and be sold for $5 million in 5 years. - Option B is a cheaper alternative with less technology, a longer life, but higher operating conts. This option will cost $7 million today with an annual operating cost of $2.5 mitlion. This assembly line will last for 8 years and be sold for $1 million in 8 years. The firm's cost of capisal is 12%. Assume a tax rafe of zero percent. 46. The equivalent annual cost (EAC) for Option A is s miltion: 47. The equivalent annual cost (EAC) for Opton B is 5 million
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