Question
You are trying to pick the least-expensive machine for your company. You have two choices: machine A, which will cost $75,000 to purchase and which
You are trying to pick the least-expensive machine for your company. You have two choices: machine A, which will cost $75,000 to purchase and which will have OCF of -$6,500 annually throughout the machine's expected life of three years; and machine B, which will cost $125,000 to purchase and which will have OCF of -$2,600 annually throughout that machine's four-year life. Both machines will be worthless at the end of their life. You intend to replace whichever type of machine you choose with the same thing when its life runs out, again and again out into the foreseeable future, and your business has a cost of capital of 9 percent. Calculate As equivalent annual cost (EAC).
Group of answer choices
A: -$52,890.12
B: -$38,952.55
C: -$32,816.51
D: -$36,129.11
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