Calculate EAC. You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of 2 years, costs $95 initially, and then $140 per year in maintenance costs. Machine B costs $165 initially, has a life of 3 years, and requires $115 per year in maintenance costs. Either machine must be replaced at the end of its life with an equivalent.

The discount rate is 12% and a tax rate of zero. Calculate the EAC. Which machine would you choose?

(Please show formula used for the bellow table values)

Year Machine A CFs Machine B CFs

0 ? ?

1 ? ?

2 ? ?

3 ? ?

4 ? ?

5 ? ?

6 ? ?

7 ? ?

8 ? ?

9 ? ?

10 ? ?

EAC A: ?

EAC B: ?

Choice: ?