Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace their primary packing machine and are considering two different options. Machine 1 costs $399,900 and lasts 5 years before it needs replaced. The annual aftertax operating cost for the machine is $37,200. Machine 2 costs $543,500 and should last for 7 years. It has an annual aftertax operating cost of $24,150. What is the equivalent annual cost of each machine if the required return is 12 percent? EAC for Machine 1 = EAC for Machine 2 =
Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace their primary packing machine and are considering two different options. Machine 1 costs $399,900 and lasts 5 years before it needs replaced. The annual aftertax operating cost for the machine is $37,200. Machine 2 costs $543,500 and should last for 7 years. It has an annual aftertax operating cost of $24,150. What is the equivalent annual cost of each machine if the required return is 12 percent? EAC for Machine 1 = EAC for Machine 2 =
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace their primary packing
machine and are considering two different options.
Machine 1 costs $399,900 and lasts 5 years before it needs replaced. The annual aftertax operating cost for the machine
is $37,200.
Machine 2 costs $543,500 and should last for 7 years. It has an annual aftertax operating cost of $24,150.
What is the equivalent annual cost of each machine if the required return is 12 percent?
EAC for Machine 1 =
EAC for Machine 2 =
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