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u Year Alternative A Alternative B $(75.000) (19.000) (19.000) (19.000) (19,000) 119.000) (19.000 (19.000) $(50.000) (8.000 (8.000 (8,000) 2 3 4 5 (Related to Checkpoint
u Year Alternative A Alternative B $(75.000) (19.000) (19.000) (19.000) (19,000) 119.000) (19.000 (19.000) $(50.000) (8.000 (8.000 (8,000) 2 3 4 5 (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 $75,000 to purchase, while alternative B will cost only $50,000 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 9 percent b. Which of the alternatives do you think Barry should select? Why? a. Alternative A's EAC at a discount rate of 8% is $ (Round to the nearest onnt.)
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