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Megatrac Co. is evaluating tow different machines. Machine A costs $215,000 has a four year life, and has a pretax operating costs of $40,000 per year. Machine B costs $270,000, has a six-year life, and a has a pretax operating cost of $10,000 per year. Both machines use straight line depreciation to zero over the project's life and assume a salvage value of $20,000. The company has a 35% tax rate and a discount rate of 12%. Calculate the equivalent annual cost for Machine A and Machine B. Calculate the net present value of Machine A and Machine B.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92341359

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