You are evaluating two different silicon wafer milling machines. The Techron I costs $252,000, has a three-year life, and has pretax operating costs of $67,000 per year. The Techron Il costs $440,000, has a five-year life, and has pretax operating costs of $40,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $44,000. If your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Techron I Techron II $ -304,725.75 Which machine should you choose? O Techron I O Techron II

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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You are evaluating two different silicon wafer milling machines. The Techron I costs $252,000, has a three-year life, and has pretax
operating costs of $67,000 per year. The Techron Il costs $440,000, has a five-year life, and has pretax operating costs of $40,000 per
year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $44,000. If
your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines.
Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round
your answers to 2 decimal places, e.g., 32.16.
Techron I
Techron II
$
-304,725.75
Which machine should you choose?
O Techron I
O Techron II
Transcribed Image Text:You are evaluating two different silicon wafer milling machines. The Techron I costs $252,000, has a three-year life, and has pretax operating costs of $67,000 per year. The Techron Il costs $440,000, has a five-year life, and has pretax operating costs of $40,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $44,000. If your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Techron I Techron II $ -304,725.75 Which machine should you choose? O Techron I O Techron II
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