You need to choose between two machines based on the following information: Machine 1 has a 4-year
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You need to choose between two machines based on the following information: Machine 1 has a 4-year life and costs $322,500 with pre-tax operating costs of $64,500 per year. Machine 2 has a 3-year life and costs $425,250 with pre-tax operating costs of $39,600 per year. Both machines have a salvage value of $22,500 and are classed with a CCA rate of 18% per year. The company tax rate is 30% and the discount rate is 10%.
a) What is the EAC?
b) Which machine would you select as an investment?
Related Book For
Statistics The Art and Science of Learning from Data
ISBN: 978-0321755940
3rd edition
Authors: Alan Agresti, Christine A. Franklin
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