Jackson & Sons uses packing machines to prepare its products for shipping. They need to...
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Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace their primary packing machine and are considering two different options.
Machine 1 costs $409,500 and lasts 4 years before it needs replaced. The annual aftertax operating cost for the machine is $34,900.
Machine 2 costs $536,300 and should last for 6 years. It has an annual aftertax operating cost of $23,000.
What is the equivalent annual cost of each machine if the required return is 19 percent?
EAC for Machine 1 =
EAC for Machine 2 =
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