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What is the eac of each model

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Question - Gold Star Industries is contemplating a purchase of computers. The firm has narrowed its choices to the SAL 5000 and the HAL 1000. The company would need eight SALs, and each SAL costs $3,250 and requires $330 of maintenance each year. At the end of the computer's seven-year life, each one could be sold for $220. Alternatively, the company could buy six HALs. Each HAL costs $3,700 and requires $465 of maintenance every year. Each HAL lasts for five years and has a resale value of $210 at the end of its economic life. The company will continue to purchase the model that it chooses today into perpetuity, and the tax rate is 24 percent. Assume that the maintenance costs occur at year-end. Depreciation is straight-line to zero. What is the EAC of each model if the appropriate discount rate is 11 percent?

Reference no: EM133177208

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