Question: 1 . You are evaluating two different silicon wafer milling machines. The Techron I costs $ 2 7 3 , 0 0 0 , has

1 .

You are evaluating two different silicon wafer milling machines. The Techron I costs $

273, 000,

has a

3 -

year life, and has pretax operating costs of $

74, 000

per year. The Techron II costs $

475, 000,

has a

5 -

year life, and has pretax operating costs of $

47, 000

per year. For both milling machines, use straight

-

line depreciation to zero over the project

s life and assume a salvage value of $

51, 000 .

If your tax rate is

25

percent and your discount rate is

11

percent, compute the EAC for both machines.

2 .

Tanaka Industrial Systems Company is trying to decide between two different conveyor belt systems. System A costs $

275, 000,

has a

4 -

year life, and requires $

81, 000

in pretax annual operating costs. System B costs $

355, 000,

has a

6 -

year life, and requires $

75, 000

in pretax annual operating costs. Both systems are to be depreciated straight

-

line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is

22

percent and the discount rate is

9

percent. Calculate the EAC for both conveyor belt systems.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Case 23-2 Statement of Cash Flows Cindy Flores and Carlos Esteban are examining the following statement of cash flows for Miami Clothes, Inc.'s first year of operations. The fiscal year is from March...

1. You are evaluating two different silicon wafer milling machines. The Techron I costs $320,000, has a four-year life, and has operating costs of $85,000 per year. The Techron II costs $456,000, has...

1.) You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a three-year life, and has pretax operating costs of $71,000 per year. The Techron II costs...

You are evaluating two different silicon wafer milling machines. The Techron I costs 3-year life, and has pretax operating costs of $68,000 per year. The $255,000, has a Techron II costs $445,000,...

1. You are evaluating two different silicon wafer milling machines. The Techron I costs $215,000, has a three-year life, and has pretax operating costs of $35,000 per year. The Techron II costs...

1. You are evaluating two different silicon wafer milling machines. The Techron I costs $246,000, has a three-year life, and has pretax operating costs of $65,000 per year. The Techron II costs...

Raphael Restaurant is considering the purchase of a $9,300 souffl maker. The souffl maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine...

1.Calculating OCF Ranney, Inc., has sales of $14,900, costs of $5,800, depreciation expense of $1,300, and interest expense of $780. If the tax rate is 40 percent, what is the operating cash flow, or...

What are some of the positive impacts that information technology can have on organizations? What are some of the negative impacts?

Compute the remaining book value (RBV) of an equipment at end of year 5. The equipment costs $6,000,000 today. The equipment is considered for tax purposes as a 7-year MACRS class. The MACRS table is...

8. Given the information in Table 1 , below, what is the opportunity cost of going from point B to point C? And of going from point D to point C? Units of Guns TABLE 1 Hypothetical Production...

10) For a bond that pays cash interest (i.e., not a zero coupon bond), YTM is (a) always equal to the coupon rate (b) always equal to the current yield (c) is always less than the coupon rate (d) can...

Members were not free to refuse to join or to leave the cooperative, or to employ outside labour or be employed as outside labour.

Termination of employment. This involves a number of safeguards, with redundancies necessitating the involvement of the works council.

the disposal of its residual income into the central state budget (the definition of what is residual income is itself decided by the state);