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European Products Company is considering two machines for purchase.  The machine is integral to their business, so...

European Products Company is considering two machines for purchase.  The machine is integral to their business, so when it wears out, it will be replaced with a similar machine.  The company uses a discount rate of 8% for their investments.  Compute the equivalent annual cost of each machine.

                                                Machine A                            Machine B

Initial cost                               220,000                                   195,000

Useful Life                               15 years                                  13 years

Annual maintenance          1,200 per year                       2,100 per year

EAC of A ___________           EAC of B __________  Which should EPC choose? ______________

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jeff jeffy answered 2 years ago
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