Data for two machines is as shown below: Machine X Machine Y Initial Cost $125,000 $195,000...

Data for two machines is as shown below:

	Machine X	Machine Y
Initial Cost	$125,000	$195,000
Life	6	12
Salvage	12%	12%
First year cost	$12,000	$15,000
Increase in cost per year	$1,000	$1,000
Rate (p.y.c.y.)	5%	5%

Which of the following statements is TRUE if the price of Machine X is estimated to remain the same over the foreseeable future?

	A.	The EUAC for both the machines is the same.
	B.	The EUAC of X is greater than that of Y by $3,600.
	C.	The EUAC of X is less than that of Y by $3,600.
	D.	The EUAC for the machines cannot be determined based on the information provided.

Solutions

Expert Solution

Option C. The EUAC of X is less than that of Y by $3,600

jeff jeffy answered 1 year ago

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