Calculate the eac

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Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A coats S3.078.000 and will last for soc years. Variable costs a-e 30 percent of sales, and fixed costs a-e $220.000 per year. Machine B costs S5.274.000 and will last for rune years. Variable costs for this machine are 25 percent of sales and fixed costs are Si55.000 per year. The sales for each machine w be $10.6 million per year. The required return is 9 percent, and the tax rate is 34 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine. (Enter your answer In dollars, not millions of dollars, e.g. 1.234,567. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Which machine should you choose?

Reference no: EM131012586

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