You Are Evaluating Two Different Machines

You are evaluating two different machines. Machine A costs $10,000, has a five-year life, and has an annual OCF (after-tax) of −$2,500 per year. Machine B costs $15,000, has a seven-year life, and has an annual OCF (after-tax) of −$2,000 per year. If your discount rate is 14 percent, using EAC which machine would you choose?

A) Machine A
B) Machine B
C) All of these choices are correct.
D) Neither machine A nor B

Correct Answer:

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