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You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a...

You are evaluating two different silicon wafer milling machines. The Techron I costs $255,000, has a 3-year life, and has pretax operating costs of $68,000 per year. The Techron II costs $445,000, has a 5-year life, and has pretax operating costs of $41,000 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 your tax rate is 24 percent and your discount rate is 13 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Techron I EAC:

Teachron II EAC:

Which machine do you prefer?

  • Techron I

  • Techron II

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Expert Solution

jeff jeffy answered 9 months ago
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