You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a...

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You are evaluating two different silicon wafer milling machines.The Techron I costs $258,000, has a 3-year life, and has pretaxoperating costs of $69,000 per year. The Techron II costs $450,000,has a 5-year life, and has pretax operating costs of $42,000 peryear. For both milling machines, use straight-line depreciation tozero over the project’s life and assume a salvage value of $46,000.If your tax rate is 25 percent and your discount rate is 10percent, compute the EAC for both machines. (A negative answershould be indicated by a minus sign. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)

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Solution The EAC of Techron I See Answer

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You are evaluating two different silicon wafer milling machines.The Techron I costs $258,000, has a 3-year life, and has pretaxoperating costs of $69,000 per year. The Techron II costs $450,000,has a 5-year life, and has pretax operating costs of $42,000 peryear. For both milling machines, use straight-line depreciation tozero over the project’s life and assume a salvage value of $46,000.If your tax rate is 25 percent and your discount rate is 10percent, compute the EAC for both machines. (A negative answershould be indicated by a minus sign. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.)