Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table. He is told to assume that:

a) the life of each machine is 3 years, and

b) the company thinks it knows how to make 12% on investments no more risky than this one. Machine A Machine B Original cost $10,000 $20,000 Labor per year 2,000 4,000 Maintenance per year 4,000 1,000 Salvage value 2,000 7,000 Determine, via the present value method, which machine Tim should recommend.