Problem:
You are evaluating two different silicon wafer milling machines. The Techron I costs $222,000, has a three-year life, and has pretax operating costs of $57,000 per year. The Techron II costs $390,000, has a five-year life, and has pretax operating costs of $30,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $34,000.
Required:
Question: If your tax rate is 35 percent and your discount rate is 9 percent, compute the EAC for both machines
Note: Provide support for your rationale.