Assume an equipment costs $735,000 and lasts six years before it is replaced. The operating cost is $52,347 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 8.5 percent? (Hint: the EAC should account for both initial investment and annual operating costs) O $223,404.63 $218,581.42 $213,758.21 $208,935.00 $204,111.79 QUESTION 6 A company 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 10 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 $333,000, annual operating costs of $27,000, and a 6-year life. Machine B costs $285,000, has annual operating costs of $37,000, and a 5-year life. The firm currently pays no taxes. Which machine should be purchased and why? Machine A; because it will save the company about $6,475 a year Machine A; because it will save the company about $8,723 a year Machine B; because it will save the company about $7,441 a year Machine B; because it will save the company about $9,803 a year Machine B; because it will save the company about $11,692 a year O