Question: USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING TWO (2) QUESTIONS Ruff Motors needs to select an assembly line for producing their new SUV. They
USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING TWO (2) QUESTIONS Ruff Motors needs to select an assembly line for producing their new SUV. They have two options: - Option A is a highly automated assembly line that has a large up-front cost but low maintenance cost over the years. This option will cost \$8 million today with a yearly operating cost of $2 million. The assembly line will last for 5 years and be sold for $5 million in 5 years. - Option B is a cheaper alternative with less technology, a longer life, but higher operating costs. This option will cost \$7 million today with an annual operating cost of \$2.5 million. This assembly line will last for 8 years and be sold for $1 million in 8 years. The firm's cost of capital is 12%. Assume a tax rate of zero percent. 46. The equivalent annual cost (EAC) for Option A is $ million. 47. The equivalent annual cost (EAC) for Option B is $ million
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