Consider a factory that must have an air cleaner. The equipment is mandated by law, so...

 

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Consider a factory that must have an air cleaner. The equipment is mandated by law, so there is no "doing without". There are two choices: • The "good cleaner" costs $3,500 today, has annual operating costs of $300, lasts for 7 years, and can be resold at $300 seven years later. • The "bad cleaner" costs $2,500 today, has annual operating costs of $400, lasts for 4 years, and can be resold at $100 four years later. Given a 6% discount rate and zero taxes, the EAC of the good cleaner is: Consider a factory that must have an air cleaner. The equipment is mandated by law, so there is no "doing without". There are two choices: • The "good cleaner" costs $3,500 today, has annual operating costs of $300, lasts for 7 years, and can be resold at $300 seven years later. • The "bad cleaner" costs $2,500 today, has annual operating costs of $400, lasts for 4 years, and can be resold at $100 four years later. Given a 6% discount rate and zero taxes, the EAC of the good cleaner is:

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To find the Equivalent Annual Cost EAC of the good cleaner we need to calculate the equiv... View the full answer