Question
You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs
You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,200 and is expected to run for 7 years; Model B is more expensive, with a price of $14,700, and has an expected life of 9 years. The annual maintenance costs are $840 for Model A and $650 for Model B. Assume that the opportunity cost of capital is 11 percent. Calculate equivalent annual costs (EAC) of each models. (Do not round the discount factor. Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.)
I tried to work through one attempt and could not understand the formula, I'll keep trying. Could someone please help?
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