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You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,200 to purchase and has a three-year life. Machine B costs $17,200 to purchase but has a four-year life. Regardless of which machine you purchase, it will have to be replaced at the end of its operating life. Which machine should you choose? Assume a marginal tax rate of 35 percent and a discount rate of 12 percent.

Equivalent Annual Cost (EAC) of machine A

Equivalent Annual Cost (EAC) of machine B

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92424649

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