Question
Suppose that you are choosing between two printers for an office. Printer A costs $600, will last for 3 years, and will require after-tax net
Suppose that you are choosing between two printers for an office. Printer A costs $600, will last for 3 years, and will require after-tax net expenses for printer cartridges of $400 per year; Printer B only costs $250, will last for 4 years, but will require after-tax net expenses for printer cartridges of $550 per year. If your firm faces a cost of capital of 11 percent, which printer should be chosen, and why?
a. Printer A, because it has an EAC of $645.53 b. Printer B, because it has an EAC of $630.58 c. Printer B, because it has an EAC of $-630.58
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