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- Data table Year Alternative A Alternative B 0 $(85,000) $(60,000) 1 (16,000) (8,000) 2 (16,000) (8,000) 3 (16,000) (8,000) 4 (16,000) 5 (16,000) 6 (16,000) 7 (16,000) (Click on the icon in order to copy its contents into a spreadsheet.) Print Done (Related to Checkpoint 11.2) (Calculating EAC) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm's new plasma cutter shop. The two alternatives, denoted A and B below, will perform the same task, but alternative A will cost $85,000 to purchase, while alternative B will cost only $60,000. Moreover, the two alternatives will have very different cash flows and useful lives. The after-tax costs for the two projects are as follows: a. Calculate each project's EAC, given a discount rate of 9 percent. b. Which of the alternatives do you think Barry should select? Why? a. Alternative A's EAC at a discount rate of 9% is $ (Round to the nearest cent.) - Data table Year Eclipse Sabre 0 $(1,450,000) $(850,000) 1 (24,000) (55,000) 2 (31,000) (55,000) 3 (31,000) (65,000) 4 (31,000) (65,000) 5 (39,000) (78,000) 6 (39,000) (39,000) 8 (39,000) 9 (39,000) 10 (39,000) (Click on the icon in order to copy its contents into a spreadsheet.) Print Done (Equivalent annual cost calculation) The Templeton Manufacturing and Distribution Company of Tacoma, Washington, is contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both alternatives will accomplish the same task but the Eclipse Model is substantially more expensive than the Sabre Model and will not have to be replaced for 10 years, whereas the cheaper model will need to be replaced in just 5 years. The costs of purchasing the two systems and the costs of operating them annually over their expected lives is provided below: a. Templeton typically evaluates investments in plant improvements using a required rate of return of 9 percent. What are the NPVs for the two systems? b. Calculate the equivalent annual costs for the two systems. c. Based on your analysis of the two systems using both their NPV and EAC, which system do you recommend the company pick? Why? a. The NPV for Eclipse at a discount rate of 9% is $ (Round to the nearest dollar.)