A new machine costs $899,090 and falls in a 29.50% CCA class.  The machine will have zero value after 5 years of use but will save $417,680 annually in operating costs before taxes in those five years.  Assume a tax rate of 34.17%.  Using a required return of 15.11%, what is the equivalent annual cost (EAC) of the machine purchase, considering the annual cash flow, initial purchase, and CCA tax shield? Options   $59,682   $61,252   $62,823   $64,393   $65,964

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A new machine costs $899,090 and falls in a 29.50% CCA class.  The machine will have zero value after 5 years of use but will save $417,680 annually in operating costs before taxes in those five years.  Assume a tax rate of 34.17%.  Using a required return of 15.11%, what is the equivalent annual cost (EAC) of the machine purchase, considering the annual cash flow, initial purchase, and CCA tax shield?

Options

 

$59,682

 

$61,252

 

$62,823

 

$64,393

 

$65,964

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