Question: You are evaluating two different dough mixing machines: - The Techron I costs $150,000, has a three-year life, and has pretax operating costs of $32,000

You are evaluating two different dough mixing machines:

- The Techron I costs $150,000, has a three-year life, and has pretax operating costs of $32,000 per year.

- The Techron II costs $255,000, has a five-year life, and has pretax operating costs of $19,000 per year.

For both machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $20,000. If your tax rate is 35% and your discount rate is 12%, which machine do you prefer? Why?

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