EAC Approach
You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $69,000, has a 5-year life, and has an annual OCF (after-tax) of –$11,100 per year. The Keebler CookieMunster costs $95,500, has a 7-year life, and has an annual OCF (after-tax) of –$9,100 per year.
If your discount rate is 13 percent, what is each machine’s EAC? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
Pillsbury 707 =
Keebler CookieMunster =