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Question: You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,200 and is expected to run for 7 years; model B is more expensive, with a price of $15,200 and has an expected life of 10 years. The annual maintenance costs are $840 for model A and $710 for model B. Assume that the opportunity cost of capital is 9 percent. Calculate EAC for both the models and choose which one should you buy? (Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.)

The EAC of Model A is $

The EAC of Model B is $

Since EAC is lower for , you should buy .

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