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Office Automation Inc must choose between two copiers the XX40 or the RH45 The XX40 costs $1600 and will last for 3 years The copier will require a real aftertax cost of $190 per year after all

Office Automation, Inc., must choose between two copiers, the XX40 or the RH45. The XX40 costs $1,600 and will last for 3 years. The copier will require a real aftertax cost of $190 per year after all relevant expenses. The RH45 costs $2,100 and will last 4 years. The real aftertax cost for the RH45 will be $165 per year. All cash flows occur at the end of the year. The inflation rate is expected to be 5 percent per year, and the nominal discount rate is 10 percent.

Calculate the EAC for each copier. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

  EAC
  XX40 $
  RH45 $
 

  

Which copier should the company choose?
 
  RH45
  XX40
 

V

Apr 28 2020 View more View Less

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