a)Why interest expenses are not included in the estimated cash flow for capital investment decisions?
b)You are evaluating two different silicon wafer milling machines. The Techron I costs $215,000, has a three-
year life, and has pretax operating costs of $35,000 per year. The Techron II costs $270,000, has a five-year
life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line
depreciation to zero over the project’s life and assume a salvage value of $20,000. If your tax rate is 35 percent
and your discount rate is 12 percent, compute the EAC for both machines. Which do you prefer? Why?