It appears that Machine B will come out cheaper than Machine A since its EAA is...

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It appears that Machine B will come out cheaper than Machine A since its EAA is P 208.696.26 compared to Machine A EAA of P 233,734.54. So, Machine B has to be chosen. Now, supposing the cost of money has gone up to 35%, is it reasonable to acquire Machine B over Machine A? Let us evaluate: Machine A: 5 years; 35% Factor= 2.220 2.220 x P 100,000 P 222,000+P 400,000-P 622,000/2.220-P 280,180.18 Machine B: 7 years; 35% Factor=2.508 2.508 x P 70,000-P 175,560 +P 500,000-P 675,560/2.508-P 269,362.04 Since it appeared that Machine B has a lower cost of P 269,362.04 compared to Machine A of P 280, 180.18, the choice should be Machine B over Machine A inspite of the high cost of money. It appears that Machine B will come out cheaper than Machine A since its EAA is P 208.696.26 compared to Machine A EAA of P 233,734.54. So, Machine B has to be chosen. Now, supposing the cost of money has gone up to 35%, is it reasonable to acquire Machine B over Machine A? Let us evaluate: Machine A: 5 years; 35% Factor= 2.220 2.220 x P 100,000 P 222,000+P 400,000-P 622,000/2.220-P 280,180.18 Machine B: 7 years; 35% Factor=2.508 2.508 x P 70,000-P 175,560 +P 500,000-P 675,560/2.508-P 269,362.04 Since it appeared that Machine B has a lower cost of P 269,362.04 compared to Machine A of P 280, 180.18, the choice should be Machine B over Machine A inspite of the high cost of money.

Answer rating: 100% (QA)

ANS WER Yes it is still reasonable to acquire Machine B over Mac... View the full answer