Answer:
$24,321.02
Explanation:
For computing the EAC first we have to determine the net present value for both machines which are shown below:
For Machine A
Net present value = Annual cash outflows × PVIFA factor for 15% at four years - initial cost
= -$46,200 × 2.8550 - $462,000
= -$131,901 - $462,000
= -$593,901
Now the EAC is
= -$593,901 ÷ 2.8550
= -$208,021.37
For Machine B
Net present value = Annual cash outflows × PVIFA factor for 15% at seven years - initial cost
= -$16,500 × 4.1604 - $898,000
= -$68,646.60 - $898,000
= -$966,646.60
Now the EAC is
= $966,646.60 ÷ 4.1604
= -$232,344.63
The different amount in EAC is
= $24,323.26