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You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15.700 to purchase and has a three- year
You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15.700 to purchase and has a three- year life. Machine B costs $17,000 to purchase but has a four year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Assume a marginal tax rate of 35 percent and a discount rate of 13 percent Calculate the equivalent annual costs (EAC) of each machines. (Do not round intermediate calculations. Round answers to 2 decimal places. eg. 15.27) Equivalent Annual Cost (EAC) of machine A Equivalent Annual Cost (EAC) of machine B $ Which machine should you choose? You should choose
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