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Question - You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,500 and is expected to run for 6 years; Model B is more expensive, with a price of $13,600, and has an expected life of 9 years. The annual maintenance costs are $850 for Model A and $670 for Model B. Assume that the opportunity cost of capital is 11 percent. Calculate equivalent annual costs (EAC) of each models.
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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