Question
In: Finance
You are evaluating two different milling machines to replace your current aging machine. Machine A costs...
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $266,735, has a three-year life, and has pretax operating costs of $64,279 per year. Machine B costs $395,418, has a five-year life, and has pretax operating costs of $32,757 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $40,798. Your tax rate is 34 % and your discount rate is 10 %.
What is the EAC for Machine A? (Round answer to 2 decimal places. Do not round intermediate calculations)
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $271,107, has a three-year life, and has pretax operating costs of $71,215 per year. Machine B costs $400,129, has a five-year life, and has pretax operating costs of $31,750 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $44,650. Your tax rate is 34 % and your discount rate is 10 %.
What is the EAC for Machine B? (Round answer to 2 decimal places. Do not round intermediate calculations).
Solutions
jeff jeffy answered 2 days agoRelated Solutions
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If your tax rate is 21 percent and your discount rate is 12
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year. For both milling machines, use straight-line depreciation to
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machines will have a salvage value of 20,000. The company tax rate
is 35% and the discount rate is 12%. Which machine should you
purchase?
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