ABC Inc. is considering the purchase of a new machine for the production of latex.

Machine A costs $2,900,000 and will last for six years. Variable costs are 35% of sales, and fixed costs are $170,000 per year.

Machine B costs $5,100,000 and will last for nine years. Variable costs for this machine are 30% of sales and fixed costs are $130,000 per year.

The sales for each machine will be $10 million per year.

The required return is 10%, and the tax rate is 35%.

Both machines will be depreciated on a straight-line basis to zero over their lives.

At the end of the life, each machine can be salvaged for 10% of the purchasing cost.

If the company plans to replace the machine with the same model once it wears out, which machine should the company choose? Why?