The copier will require real aftertax cost

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Reference no: EM131321366

Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $2,800 and will last for 6 years. The copier will require a real aftertax cost of $310 per year after all relevant expenses. The RH45 costs $3,300 and will last 8 years. The real aftertax cost for the RH45 will be $285 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 6 percent per year, and the nominal discount rate is 10 percent. Calculate the EAC for each copier.

Reference no: EM131321366

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