Question
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $253,136, has a three-year life, and has pretax operating
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $253,136, has a three-year life, and has pretax operating costs of $67,770 per year. Machine B costs $377,353, has a five-year life, and has pretax operating costs of $34,852 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $39,389. Your tax rate is 34 % and your discount rate is 10 %.
What is the EAC for Machine B? (Round answer to 2 decimal places. Do not round intermediate calculations).
Topic: Capital Budgeting Problem
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