1. For a present value of $500, create a table that shows the FV at 0%, 5%, and 10% for 0, 1, 2, 3, 4, and 5 years.
2. In a single plot, graph the tables created in part D with years on the horizontal axis and FV on the vertical axis for each interest rate and be sure to label the y-axis, x-axis, chart title, and legend.
3. You are evaluating two different milling machines to replace your current aging machine. Machine A costs $245878, has a three-year life, and has pretax operating costs of $64770 per year. Machine B costs $387055, has a five-year life, and has pretax operating costs of $30018 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $38368. Your tax rate is 34 % and your discount rate is 10 %.
What is the EAC for Machine A?