You are evaluating two different silicon wafer milling machines. The Techron I costs $246,000, has a...

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You are evaluating two different silicon wafer milling machines.The Techron I costs $246,000, has a 3-year life, and has pretaxoperating costs of $65,000 per year. The Techron II costs $430,000,has a 5-year life, and has pretax operating costs of $38,000 peryear. For both milling machines, use straight-line depreciation tozero over the project’s life and assume a salvage value of $42,000.If your tax rate is 21 percent and your discount rate is 10percent, compute the EAC for both machines.
Techron I
Techron II

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3.9 Ratings (473 Votes)

As per given information table as below Particulars Techron 1 Techron 2 Cost 246000 430000 Life 3 5 Pretax Operating Costs 65000 38000 Salvage Value 42000 42000 Tax Rate 21 21 Discount Rate 10 10 Depreciation 82000 86000 Tax shield on Depreciation See Answer

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You are evaluating two different silicon wafer milling machines.The Techron I costs $246,000, has a 3-year life, and has pretaxoperating costs of $65,000 per year. The Techron II costs $430,000,has a 5-year life, and has pretax operating costs of $38,000 peryear. For both milling machines, use straight-line depreciation tozero over the project’s life and assume a salvage value of $42,000.If your tax rate is 21 percent and your discount rate is 10percent, compute the EAC for both machines.Techron ITechron II