A company must decide whether to buy Machine A or Machine B.
A B
First cost $9,000 $17,000
Annual maintenance $1,000 $450
Salvage value $4,000 $9,000
Useful life, in years 4 10
At a 9% annual interest rate, which Machine should be purchased? Use an annual cash flow analysis to find your answer.
a) What is the equivalent uniform annual cost (EUAC) of Machine A?
b) What is the equivalent uniform annual cost (EUAC) of Machine B?