Finance - Equivalent Annual Cost

[v3rrv3]

Any of you guys familiar with this? I think I am doing it right but my online thing won't take my answer. The problem reads:
You are evaluating two different silicon wafer milling machines. The Techron I costs $185,000, has a 2-year life, and has pretax operating costs of $38,000 per year. The Techron II costs $309,000, has a 4-year life, and has pretax operating costs of $18,000 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. Your tax rate is 34 percent and your discount rate is 16 percent.

Techron 1 anyone give some help?

 

[bobsmith1492]

What is the question? It states lots of facts but asks nothing.

 

[Ns1]

Generally you start by giving your own input and then asking others for advice.

 

[v3rrv3]

The question is the Equivalent Annual Cost for Techron 1. This is how i worked out the problem:
Original Cost - 185000
Year 1 Discounted - 32758.62
Year 2 Discounted - 28240.19
Salvage Value After Taxes Discounted - 9809.75
NPV = - 236189.06
Divide by annuity factor 1.6052
= -147139.9576


Edit I think I'm not counting in the depreciation write off? NM for the time being unless someone wants to explain it

 

[JS80]

(185000 - 20000)/2 + 38000 = 120500/year cost
tax benefit 120500 * (1 - 0.34) = 79530/ year cost net of tax benefit
do NPV for 2 years @ 16%, divide by 2.

 

[v3rrv3]

63842.05 ? Its still coming back wrong I think I might have to go talk to my prof because it confuses the hell out of me, online homework is the worst idea ever