A firm is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 12 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $600,000, annual operating costs of $52,000, and a 8-year life. Machine B costs $365,000, has annual operating costs of $87,000, and a 5-year life. The firm currently pays no taxes. Which machine should be purchased and why (Hint: calculate and compare the EAC of the two machines)?

A. Machine A; because it will save the company about $8,634 a year

B. Machine A; because it will save the company about $12,507 a year

C. Machine B; because it will save the company about $10,610 a year

D. Machine A; because it will save the company about $15,473 a year

E. Machine B; because it will save the company about $5,807 a year