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You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,200 and is...
You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $9,200 and is expected to run for 7 years. Model B is more expensive, with a price of $15,200 and has an expected life of 10 years. The annual maintenance costs are $840 for Model A and $710 for Model B. Assume that the opportunity cost of capital is 9%. Calculate EAC for both models and choose which one you should buy.