You are starting a family pizza parlor and need to buy a, Financial Management

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You are starting a family pizza parlor and need to buy a

You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind.

Model A costs $9,400 and is expected to run for 6 years; model B is more expensive, with a price of $15,200 and has an expected life of 10 years.

The annual maintenance costs are $800 for model A and $740 for model B.

Assume that the opportunity cost of capital is 10 percent. Calculate EAC for both the models and choose which one should you buy.

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Financial Management: You are starting a family pizza parlor and need to buy a

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