Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN: 9781337902571
Author: Eugene F. Brigham, Joel F. Houston
Publisher: Cengage Learning
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You are evaluating two different silicon wafer milling machines. The Techron I costs
$300,000, has a three-year life, and has pretax operating costs of $83,000 per year. The
Techron II costs $520,000, has a five-year life, and has pretax operating costs of
$49,000 per year. For both milling machines, use straight-line depreciation to zero over
the project's life and assume a salvage value of $60,000. If your tax rate is 24 percent
and your discount rate is 12 percent, compute the EAC for both machines. (A negative
answer should be 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
Which machine do you prefer?
Techron I
Techron II
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Transcribed Image Text:You are evaluating two different silicon wafer milling machines. The Techron I costs $300,000, has a three-year life, and has pretax operating costs of $83,000 per year. The Techron II costs $520,000, has a five-year life, and has pretax operating costs of $49,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $60,000. If your tax rate is 24 percent and your discount rate is 12 percent, compute the EAC for both machines. (A negative answer should be 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 Which machine do you prefer? Techron I Techron II
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