Problem:
You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $70,500, has a 5-year life, and has an annual OCF (after tax) of -$11,400 per year. The Keebler Cookie Munster costs $97,000, has a 7-year life, and has an annual OCF (after tax) of -$9,400 per year.
Required:
Question: If your discount rate is 13 percent, what is each machine's EAC?
Note: Please explain comprehensively and give step by step solution.