You Are Evaluating Two Different Machines

question 78

Multiple Choice

You are evaluating two different machines.Machine A costs $25,000,has a five-year life,and has an annual OCF (after tax) of −$6,000 per year.Machine B costs $30,000,has a seven-year life,and has an annual OCF (after tax) of −$5,500 per year.If your discount rate is 10 percent,using EAC which machine would you choose?

• A) Machine A
• B) Machine B
• C) Both machines A and B
• D) Neither machine A nor B