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Vandalay Industries is considering the purchase of a new machine for the production of latex, Machine A costs $2,300,000 and will last for 3 years.
Vandalay Industries is considering the purchase of a new machine for the production of latex, Machine A costs $2,300,000 and will last for 3 years. Variable costs are 38 percent of sales and fixed costs are $124.000 per year. Machine B costs $4,570,000 and will last for 5 years Variable costs for this machine are 27 percent of sales and fixed costs are $89,000 per year. The sales for each machine will be $9.14 million per year. The required return is 10 percent and the tax rate is 21 percent. Both machines will be depreciated on a straight-line basis. If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? $-3,605,652.05 $ 3,614,947.95 $-8,966,722.98 $-3,785,934.65 $-3,425,369.45 If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? $ -3,033,486.49 $-11,499,300.44 $ 4,187,113.51 $ -3,185,160.81 $ -2,881,812.16
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