\1.A factory is considering purchasing a new machine. It has two alternatives:

1

Discount rate

8%

2

Tax Rate

30%

Cost

Machine A 15500

Machine B 50000

Annual costs

Machine A 3000

MAchine B 1000

Life Span

Machine A 3 yrs

Machine B 7yrs

Whichever machine is chosen, the factory will have to continue to choose the same machine forever. Which machine should the factory choose if the interest rate is 8% and the tax rate is 30%. Assume straight line depreciation to zero salvage value over the life of each machine.