Solved: Computing the eac, The relevant discount rate is 12%. Ignoring depreciation and taxes,, Finance Basics

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Computing the eac

Problem:

You are evaluating two different sound mixers. The Jazzmaster costs $45,000, has a three-year life, and costs $5,000 per year to operate. The Discmaster costs $65,000, has a five-year life, and costs $4,000 to operate. The relevant discount rate is 12%. Ignoring depreciation and taxes, compute the EAC for both. Which do you prefer?

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Finance Basics: Computing the eac

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