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Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ 2 . 9 million and will
Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ million and will last for six years. Variable costs are percent of sales, and fixed costs are $ per year. Machine B costs $ million and will last for nine 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. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine.
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