Your firm needs a computerized machine tool lathe which costs $50,000, and requires $12,000 in maintenance for each year of its 3 year life. After 3 years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35% and a discount rate of 12%.
What is the project’s EAC assuming the machine is worthless at the end of year 3?
a. –$ 6,881
b. –$12,049
c. –$14,771
d. –$22,715
e. –$23,099
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