Toni's Tools is comparing machines to determine which one to purchase.The machines sell for differing prices,have differing operating costs,differing machine lives,and will be replaced when worn out.These machines should be compared using:
A)net present value only.
B)both net present value and the internal rate of return.
C)their equivalent annual costs.
D)the depreciation tax shield approach.
E)the replacement cost approach.

Question

Quizplus · Accepted Answer

When comparing machines with differing prices, operating costs, and lifespans, the equivalent annual cost (EAC) method is most appropriate. EAC converts the costs of each option into an equivalent annual amount, making it easier to compare options with different lifespans and cost structures.

Toni's Tools Is Comparing Machines to Determine Which One to Purchase.The