Replaced at the end of its life with an equivalent machine

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Reference no: EM131020633

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $130 initially, and then $175 per year in maintenance costs. Machine B costs $200 initially, has a life of three years, and requires $150 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. The discount rate is 11 percent and the tax rate is zero. Calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Reference no: EM131020633

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