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    Finding EAC values for given proposals

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    An office prints 200,000 pages per year. The Dell brand printer costs $1100 and will produce a total of 600,000 copies before it wears out (3 year life). The Cannon brand machine costs $1,800 and will produce 1,000,000 copies in its 5 year life. Maintenance and material costs are $.05 a page for the Dell machine and $.03 with Cannon machine. The Dell machine has a salvage value of $150 and the Cannon machine will have a salvage value of $225. The required return is 8 percent a year. Which machine should the company acquire? Show numbers and assume year-end cash flows for simplicity.

    Net present value for Dell copier_____________ Equivalent annuity for Dell copier_________

    Net present value for Cannon copier____________ Equivalent annuity for Cannon copier_________

    Which copier should be chosen? _______________

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    Solution Summary

    This solution depicts the steps to calculate NPV and EAC values for given proposals in Excel.

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