Question: pls answer within 30mins thanks You are evaluating two different milling machines. Machine I costs $270,000, has a three-year life, and has pre-tax operating costs
You are evaluating two different milling machines. Machine I costs $270,000, has a three-year life, and has pre-tax operating costs of $70,000 per year. Machine II costs $475,000, has a four-year life, and has pre-tax operating costs of $36,000 per year. Both machines have a CCA rate of 20% per year. Assume a salvage value of $45,000 for each machine. The tax rate is 30% and the discount rate is 10%. Required: Compute the equivalent annual cost (EAC) for each machine and compare costs. Which machine do you prefer and why? Round your EAC answers to 2 decimal places. Show your calculator keystrokes and solutions for the NPV of Machine I and Machine II based on the above information. Show your calculator keystrokes and solutions for computing the annual PMT for each machine based on the above information. (16 marks)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
