Question: Calculating EAC: You are evaluating two different silicon wafer milling machines. The Techron I costs $245,000, has a three-year life, and has pre-tax operating costs

Calculating EAC: You are evaluating two different silicon wafer milling machines. The Techron I costs $245,000, has a three-year life, and has pre-tax operating costs of $63,000 per year. The Techron II costs $420,000, has a five-year life, and has pretax operating costs of $35,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 22% and your discount rate is 10%, compute the EAC for both machines. Which do you prefer? Why? Use Excel to justify your answers.

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