Question: Please help show how to solve this using EAC formula and a financial calculator if possible! You need a metal cutting machine for your operations.
You need a metal cutting machine for your operations. Your current machine is wom out so you are trying to decide which one of two machines to buy as a replacement. Whichever machine you purchase will likewise be replaced after its useful life. Machine A costs $221,000 and costs $16,000 a year to operate over a 3-year life. Machine B costs $190,000 and costs $21,000 to operate over a 2-year life. Given this information, which one of the following statements is correct if the applicable discount rate is 9 percent? a. Machine A cuts the annual cost by $25,702 as compared to machine B. b. Machine B cuts the annual cost by $34,559 as compared to machine A. c. The equivalent annual cost of machine A is $261,501. d. The equivalent annual cost of machine B is $236,129
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