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You are evaluating two different devices. Equipment A costs $ 2 1 5 , 0 0 0 and is used for a period of three
You are evaluating two different devices. Equipment A costs $ and is used for a period of three years, with a pretax operating cost of $ per year. Equipment B costs $ and is used for six years, with a pretax operating cost of $ per year. Both units were depreciated to book value of over the life of the unit using the linear old method of depreciation, assuming a residual value of $ If your tax rate is the discount rate is Calculate the average cost of the two machines for the year. Which machine do you prefer?Why?
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