Use straight-line depreciation to zero over project life

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Reference no: EM131087850

You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a three-year life, and has pretax operating costs of $72,000 per year. The Techron II costs $465,000, has a five-year life, and has pretax operating costs of $45,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $49,000. If your tax rate is 35 percent and your discount rate is 9 percent, compute the EAC for both machines.

Reference no: EM131087850

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