Compute the EAC for both machines

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Question - You are evaluating two different milling machines. Machine A costs $245000, has a three-year life, and has pretax operating costs of $39000 per year. Machine B costs $315000, has a five-year life, and has pretax operating costs of $48000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $230000. If your tax rate is 35%, and your discount rate is 9%, compute the EAC for both machines. Which do you prefer? Why?

Reference no: EM133125706

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