Using equivalent uniform annual cost method, determine the value of alternative A and alternative B:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Given the two machines’ data

                                                      Machine A         Machine B

First Cost                                     P8,000.00           P14,000.00

Salvage value                                             0                 2,000.00

Annual operation                          3,000.00                2,400.00

Annual maintenance                    1,200.00                1,000.00

Taxes and insurance                                 3%                        3%

Life, years                                                   10                         15

Money is worth at least 16%

Using equivalent uniform annual cost method, determine the value of alternative A and alternative B:

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