Question
The FIN340 Company is evaluating the purchase of 2 competing machines and wants to choose the machine with the lower equivalent annual cost (EAC); Machine
The FIN340 Company is evaluating the purchase of 2 competing machines and wants to choose the machine with the lower equivalent annual cost (EAC); Machine A has an upfront purchase price of $199,600, an annual operating cost of $21,956 and a machine life of 3 years.; Machine B has an upfront purchase price of $289,000, an annual operating cost of $36,125 and a machine life of 6 years; If our company has a WACC of 15.0%, which machine has the lower equivalent annual cost (EAC) and what is its EAC?
$112,489 / Machine B
$425,714 / Machine B
$109,376 / Machine A
$109,376 / Machine B
$249,730 / Machine A
$425,714 / Machine A
$112,489 / Machine A
$425,714 / Machine B
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