(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 $90,000 to purchase, while alternative B will cost only $55,000. 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 10 percent.

b. Which of the alternatives do you think Barry should select? Why?

a. Alternative A's EA) at a discount rate of 10% is $_____ (Round to the nearest cent.)

b. Alternative B's EA) at a discount rate of 10% is $_____ (Round to the nearest cent.)

c. Which of the alternatives do you think Barry should select? Why?

Year Alternative A Alternative B S(90,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) (21,000) s(55,000) (7,000) (7,000) (7,000) 4