You are evaluating two different silicon wafer milling machines. The Techron I costs $231,000, has a three-year life, and has pretax operating costs of $60,000 per year. The Techron II costs $405,000, has a five-year life, and has pretax operating costs of $33,000 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $37,000. If your tax rate is 23 percent and your discount rate is 9 percent, compute the EAC for both machines.

Which machine should you choose?

• Techron I

• Techron II