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Year Alternative A Alternative B 0 $(90,000) $(55.000) 1 (18,000) (7.000) 2 (18,000) (7.000) 3 (18,000) (7.000) 4 (18.000) 5 (18.000) 6 (18.000) 7 7
Year Alternative A Alternative B 0 $(90,000) $(55.000) 1 (18,000) (7.000) 2 (18,000) (7.000) 3 (18,000) (7.000) 4 (18.000) 5 (18.000) 6 (18.000) 7 7 (18,000) (Click on the icon in order to copy its contents into a spreadsheet.) 01 NO (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 $90,000 to purchase, while alternative B will cost only $55,000. 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 12 percent. b. Which of the alternatives do you think Barry should select? Why? CERE a. Alternative A's EAC at a discount rate of 12% is sl (Round to the nearest cent.)
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