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  3. (4) a company is evaluating two machines that will

(4) A company is evaluating two machines that will provide the same returns to the...

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Accounting

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(4) A company is evaluating two machines that will provide the same returns to the company. The cost of machine 1 is $120,000 with annual maintenance of $8,000 and 5 years useful life. Machine 2 has a cost of $90,000 with annual maintenance of $15,000 and 3 years useful life. The machines will be replaced with another machine of equal value at the end of the lifespan. Using a rate of 8% p.a; (i) calculate the equivalent annual costs (EAC). (ii) Which of the machines should the company invest in? (justify)

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