Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,048,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $195,000 per year. Machine B costs $5,229,000 and will last for nine years. Variable costs for this machine are 35 percent of sales and fixed costs are $130,000 per year. The sales for each machine will be $10.1 million per year. The required return is 11 percent, and the tax rate is 30 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Calculate the EAC for each machine. (Negative amounts should be indicated by a minus sign.Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16)) Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,048,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $195,000 per year. Machine B costs $5,229,000 and will last for nine years. Variable costs for this machine are 35 percent of sales and fixed costs are $130,000 per year. The sales for each machine will be $10.1 million per year. The required return is 11 percent, and the tax rate is 30 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it wears out on a perpetual basis. Solution Machine A Machine B a Purchase Cost ($) 3,048,000 5,229,000 b Life of machines (years) 6 9 c Variable Cost ($) 4,040,000 3,535,000 d Fixed cost ($) 195,000 130,000 e Running cost per year (c+d) 4,235,000 3,665,000 f PVAF (based on life and 11% discount factor) 4.231 5.537 g Present Value of Running cost of machine (e*f) 17,918,285 20,293,105 h Cash outflow of machines (a+g) 20,966,285 25,522,105 i Equivalent Annual Cost (h/f) 4,955,397.07 4,609,374.21 We should choos machine B, since it has lower EAC.

1. Which of the following are absolute file paths, and which are relative?/Users/kermit/stage.jpg
Documents/paper.doc C:Program FilesTetris.exe Desktop/photo.jpg absolute path relative
path
Solution
Absolute paths at all times begin by means of a slash. Relative paths do not contain a slash at the
beginning, but can have one or two dots.
So, First and thrid are absolute paths.
second and fourth are relative paths