In: Finance
Can you please show me how to do this on excel with formulas. I am having a difficult time understanding how to incorporate the depreciation into the problem! Thank you
You are evaluating two different milling machines to replace your current aging machine. Machine A costs $248868, has a three-year life, and has pretax operating costs of $58935 per year. Machine B costs $406397, has a five-year life, and has pretax operating costs of $33004 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $40886. Your tax rate is 34 % and your discount rate is 10 %.
What is the EAC for Machine A?