Problem:
You are evaluating two different silicon wafer milling machines. The Techron I costs $246,000, has a three-year life, and has pretax operating costs of $65,000 per year. The Techron II costs $430,000, has a five-year life, and has pretax operating costs of $38,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $42,000.
Required:
Question: If your tax rate is 34 percent and your discount rate is 8 percent, compute the EAC for both machines.
Note: Can someone please give me a step by step solution?