Question
In: Finance
Lindner Corp. is comparing two machines to determine which one it should purchase. The company requires...
Lindner Corp. is comparing two machines to determine which one it should purchase. The company requires a rate of return of 14 percent and uses straight-line depreciation to a zero book value over the life of its equipment. Machine X has a cost of $352,000, annual cash outflows of $31,700, and a four-year life. Machine Y costs $554,000, has annual cash outflows of $13,000, and has a five-year life. Whichever machine is purchased will be replaced at the end of its useful life. (Round the PVAFs to the 2nd decimal place.)
a. What is the equivalent annual cost EAC for machine X (round to the nearest $100)?
EACX = $
b. What is the equivalent annual cost EAC for machine Y (round to the nearest $100)?
EACY = $
c. Which equipment should be chosen? Machine
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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