Evaluating two different silicon wafer milling machines

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You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $475,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $45,000. if the tax rate is 36% and your discount rate is 10%, What is the EAC for both machines, and which machine would be the better choice?

Reference no: EM132014688


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