Question: 4. You must decide between two machines with different lifetimes. The first machine costs $150,000 and lasts 3 years. You will depreciate it using MACRS

 4. You must decide between two machines with different lifetimes. The

4. You must decide between two machines with different lifetimes. The first machine costs $150,000 and lasts 3 years. You will depreciate it using MACRS (3-year). It also costs $54,000 per year to operate. You will be able to sell this machine for $10,000 after 3 years. The second machine costs $450,000 and lasts 10 years. You will depreciate this machine straight-line over its lifetime. It costs $14,000 per year to operate. You will be able to sell this machine for $40,000 after ten years. The marginal tax rate is 34% and the appropriate discount rate is 15%. What are the machines' EACs and which do you prefer

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