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problem: You are evaluating two different equipments. The 1st equipment costs $290,000, has a 3 year life, and has pretax operating costs of $67,000 every year. The 2ndequipment costs $510,000, has a five-year life, and has pretax operating costs of $35,000 per year. For both equipments, use straight-line depreciation to zero over the project's life and assume a salvage value of $40,000. If your tax rate is 35% and your discount rate is 10%, find out the equivalent annual cost (EAC) for both equipments. Which do you prefer, and why?

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