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A machine costs 72000, max life 3 years. Running cost each year:
1. 7200
2. 9600
3. 12000
Scrap value:
1. 24000
2. 16600
3. 9600
Cost of capital 15%
What is EAC if company decides to replace machine every 2 years
workings:
0 – (72000)
1- (7200)*0.870=(6264)
2 – (9600)*0.756=(7258)
2 – 16600*0.756=12550
total 72972/0.756=96524 for 2 years
96524/2=48262 p.a.
in your answer 44878
Please help.It should be 72972/1.626= 44878 (cumulative present value factor for 2 years is 1.626
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