Question
Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,250,000 and will last for six years.
Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,250,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $390,000 per year. Machine B costs $5,507,000 and will last for nine years. Variable costs for this machine are 30 percent of sales and fixed costs are $260,000 per year. The sales for each machine will be $12.8 million per year. The required return is 10 percent, and the tax rate is 23 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis.Calculate the EAC for each machine. System A: -4,371,540.59 System B:
Please answer for system B
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