The BA 400 Club is evaluating two baseball pitching machines that do the same job...
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- The BA 400 Club is evaluating two baseball pitching machines that do the same job but have different lives. Machine A costs $60,000 to buy and lasts three years. Annual maintenance expenses are $6,000 a year. Machine B costs $90,000 and lasts five years. Annual maintenance expenses are $4,500 a year. The firms cost of capital is 12 percent. Which machine should the BA 400 Club buy and why?
- Machine A because of its lower purchase price.
- Machine B because of its lower annual maintenance costs.
- Machine B because of its longer life.
- Machine A because of its lower equivalent annual costs (EAC).
- Machine B because of its lower equivalent annual costs (EAC).
- Machine A because of its lower purchase price.
- Machine B because of its lower annual maintenance costs.
- Machine B because of its longer life.
- Machine A because of its lower equivalent annual costs (EAC).
- Machine B because of its lower equivalent annual costs (EAC).
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