Question: You are evaluating two different silicon wafer milling machines. The Techron I costs $240,000, has a three-year life, and has pretax operating costs of $63,000

You are evaluating two different silicon wafer milling machines. The Techron I costs $240,000, has a three-year life, and has pretax operating costs of $63,000 per year. The Techron II costs $420,000, has a five-year life, and has pretax operating costs of $36,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35 percent and your discount rate is 10 percent, compute the EAC for both machines. Which do you prefer? Why?

Step by Step Solution

★★★★★

3.38 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Input area Techron I Cost 240000 Operating costs per year 63000 Life 3 Techron II Cos... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

283-B-C-F-C-B (1540).xlsx

300 KBs Excel File

Students Have Also Explored These Related Corporate Finance Questions!

You are evaluating two companies as possible investments. One entity sells services; the other entity is a merchandiser. How can you identify the merchandiser by examining the two entities' balance...

The federal corporate income tax rate is 35 percent and firms may carry back losses for two years and carry forward losses for 20 years. The carry-back must occur before carry-forward. A corporation...

You are evaluating two similar bonds. Both mature in 4 years, both have a $1,000 par value, and both pay a coupon rate of 10 %. However, one bond pays that coupon in annual installments, whereas the...

Raphael Restaurant is considering the purchase of a $9,300 souffl maker. The souffl maker has an economic life of four years and will be fully depreciated by the straight-line method. The machine...

1.Calculating OCF Ranney, Inc., has sales of $14,900, costs of $5,800, depreciation expense of $1,300, and interest expense of $780. If the tax rate is 40 percent, what is the operating cash flow, or...

You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pretax operating costs of $73,000 per year. The Techron II costs...

You are evaluating two different silicon wafer milling machines. The Techron I costs $231,000, has a three-year life, and has pretax operating costs of $60,000 per year. The Techron II costs...

You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a three-year life, and has pretax operating costs of $71,000 per year. The Techron II costs...

You are evaluating two different silicon wafer milling machines. The Techron I costs $ 2 6 4 , 0 0 0 , has a three - year life, and has pretax operating costs of $ 7 1 , 0 0 0 per year. The Techron...

Define the concept of maintenance based real estate cycles. Differentiate between endogenous and exogenous market forces and elaborate using an example. How would real estate cycles creates...

In the following descriptions of a study, confounding is present. Describe the explanatory and confounding variable in the study and how the confounding may invalidate the conclusions of the study....

Evaluate the double integral S ( 3 x + 3 y ) d A over the triangular region S with vertices ( 0 , 0 ) , ( 0 , 5 ) , and ( 1 , 5 ) . Integral =

What have you learned about the kinetic molecular model of solids and liquids? What have you enjoyed most about learning the kinetic molecular model of solids and liquids? What do you want to learn...

Question 2 (25 marks total) Shown below is the T-account of one bank in the country of Imaginia. This bank is holding 2.5% excess reserves, i.e., is holding 2.5% of its deposits as reserves in excess...

Financial Accounting Standards Board (FASB 2008). Statement of Financial Accounting Standards No. 57 Related Party Disclosures. Financial Accounting Standards Board (FASB 2020). Accounting Standards...

Olin Packett is a CGA-CPA and is employed by a Canadian private corporation. For 2020, his gross salary was $75,000 and the following amounts were withheld from his gross salary: Federal Income Tax...

Was the identification in Manson v. Brathwaite impermissibly suggestive, and did it create a substantial likelihood of misidentification? Why did the Supreme Court rule that the use of Glovers...

Multinational Corporation given that many multinationals based in many countries have much greater sales outside their domestic markets than within them, what is the particular relevance of their...

Exchange Rate Movements some countries encourage movements in their exchange rate relative to those of some other country as a short-term means of addressing foreign trade imbalances. For each of the...

1.A baseball player has a batting average of 0.225. What is the probability that he has exactly 7 hits in his next 7 at bats? The probability is 2.A distribution of values is normal with a mean of...

Q1/ Weite a java porgram that takes 10 grades of a single student in a single array and finds their averge Rules: A/The greads need to be inserted into the array using secure random B/The grades need...

A company hosts a popular web application. The web application connects to a database running in a private VPC subnet. The weh servers must be accessible only to customers on an SSL connection. The...