The opportunity cost of capital

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You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,200 and is expected to run for 7 years; model B is more expensive, with a price of $15,200 and has an expected life of 10 years. The annual maintenance costs are $810 for model A and $710 for model B. Assume that the opportunity cost of capital is 12 percent. Calculate EAC for both the models and choose which one should you buy? (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.)

Reference no: EM131310925

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