Solution-Calculate the equivalent annual costs of machines

Calculate the equivalent annual costs of machines

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Reference no: EM132630280

You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,400 to purchase and has a three-year life. Machine B costs $17,900 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 14 percent.

Calculate the equivalent annual costs (EAC) of each machines.

What is the Equivalent Annual Cost (EAC) of machine A?

What is the Equivalent Annual Cost (EAC) of machine B?

Which machine should you choose?

Reference no: EM132630280

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Calculate the equivalent annual costs of machines

Reference no: EM132630280

Reference no: EM132630280

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