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Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ 1 , 8 7 0 ,
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ and will last for years. Variable costs are percent of sales, and fixed costs are $ per year. Machine B costs $ and will last for years. Variable costs for this machine are percent of sales and fixed costs are $ per year. The sales for each machine will be $ million per year. The required return is percent and the tax rate is percent. Both machines will be depreciated on a straightline basis.
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B
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