andelay Industries is considering the purchase of a new machine for the production of latex. Machine...

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andelay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $3,300,000 and willlast for six years. Variable costs are 40 percent of sales, andfixed costs are $440,000 per year. Machine B costs $5,572,000 andwill last for nine years. Variable costs for this machine are 35percent of sales and fixed costs are $285,000 per year. The salesfor each machine will be $13.3 million per year. The requiredreturn is 10 percent, and the tax rate is 23 percent. Both machineswill be depreciated on a straight-line basis. The company plans toreplace the machine when it wears out on a perpetual basis.Calculate the EAC for each machine. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers in dollars, not millions of dollars, roundedto 2 decimal places, e.g., 1,234,567.89.) find System A SystemB

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Machine A Cost of Machine 3300000 Useful Life 6 years Annual Depreciation Cost of Machine Useful Life Annual Depreciation 3300000 6 Annual Depreciation 550000 Variable Costs 40 Sales Variable Costs 40 13300000 Variable Costs 5320000 Pretax See Answer

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andelay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $3,300,000 and willlast for six years. Variable costs are 40 percent of sales, andfixed costs are $440,000 per year. Machine B costs $5,572,000 andwill last for nine years. Variable costs for this machine are 35percent of sales and fixed costs are $285,000 per year. The salesfor each machine will be $13.3 million per year. The requiredreturn is 10 percent, and the tax rate is 23 percent. Both machineswill be depreciated on a straight-line basis. The company plans toreplace the machine when it wears out on a perpetual basis.Calculate the EAC for each machine. (A negative answer should beindicated by a minus sign. Do not round intermediate calculationsand enter your answers in dollars, not millions of dollars, roundedto 2 decimal places, e.g., 1,234,567.89.) find System A SystemB