Two machines, A and B, which perform the same functions, have the following costs and lives.
Type PV Costs Life
machine A $6000 5
machine B $8000 7
Which machine would you choose? Justify your decision. The two machines are mutually exclusive and the cost of capital is 15%.© BrainMass Inc. brainmass.com June 3, 2020, 10:07 pm ad1c9bdddf
To determine the best choice, calculate the equivalent annual cost for each scenario:
EAC(A) = $6,000/A5,15
EAC(B) = ...
Comparison of equivalent annual cost over machine life for two machines.