You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The Techron II costs $375,000, has a five-year life, and has pretax operating costs of $27,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $31,000. If your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines. (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.)
You are evaluating two different silicon wafer milling machines. The Techron I costs $213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The Techron II costs $375,000, has a five-year life, and has pretax operating costs of $27,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $31,000. If your tax rate is 24 percent and your discount rate is 9 percent, compute the EAC for both machines. (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.)
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
Problem 1PS
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![You are evaluating two different silicon wafer milling machines. The Techron I costs
$213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The
Techron II costs $375,000, has a five-year life, and has pretax operating costs of $27,000
per year. For both milling machines, use straight-line depreciation to zero over the
project's life and assume a salvage value of $31,000. If your tax rate is 24 percent and
your discount rate is 9 percent, compute the EAC for both machines. (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
Which machine should you choose?
O Techron I
Techron II
< Prev
9 of 10
Next](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F750c41ce-6ba3-46b2-8d23-69e02abfedd8%2F5881e7da-c9d4-4937-b6bf-86302dfa8b16%2Fwe1jm4o_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You are evaluating two different silicon wafer milling machines. The Techron I costs
$213,000, has a three-year life, and has pretax operating costs of $54,000 per year. The
Techron II costs $375,000, has a five-year life, and has pretax operating costs of $27,000
per year. For both milling machines, use straight-line depreciation to zero over the
project's life and assume a salvage value of $31,000. If your tax rate is 24 percent and
your discount rate is 9 percent, compute the EAC for both machines. (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
Which machine should you choose?
O Techron I
Techron II
< Prev
9 of 10
Next
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