Problem $9-16$ Project Evaluation $($LO$2)$

Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively

cheap purification system for $$12$ million. The system will last $4$ years. Do$-$lt$-$Right sells a sturdier but more

expensive system for $$20$ million; it will last for $8$ years. Both systems entail $$2$ million in operating costs; both

will be depreciated straight$-$line to a final value of zero over their useful lives; neither will have any salvage value

at the end of its life. The firm's tax rate is $30\%,$ and the discount rate is $12\%.$

a$.$ What is the equivalent annual cost of investing in the cheap system?

Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer

in millions rounded to $2$ decimal places.

b$.$ What is the equivalent annual cost of investing in the more expensive system?

Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer

in millions rounded to $2$ decimal places.

c$.$ Which system should Blooper install?