?(Calculating EAC) Barry Boswell is a financial analyst for Dossman Metal? Works, Inc. and he is analyzing two alternative configurations for the? firm's new plasma cutter shop. The two alternatives, denoted A and B? below, will perform the same? task, but alternative A will cost ?$85,000 to? purchase, while alternative B will cost only $65,000. ?Moreover, the two alternatives will have very different cash flows and useful lives. The? after-tax costs for the two projects are as? follows:
Year / Alternative A / Alternative B
0 $(85,000) $(65,000)
1 $(16,000) $(6,500)
2 $(16,000) $(6,500)
3 $(16,000) $(6,500)
4 $(16,000)
5 $(16,000)
6 $(16,000)
7 $(16,000)
a. Calculate each? project's EAC, given a discount rate of 10%
b. Which of the alternatives do you think Barry should? select? Why?
a. Alternative? A's EA) at a discount rate of 10% is ?$( ) ?(Round to the nearest? cent.)
b. Which of the alternatives do you think Barry should? select? Why?