Company Smart is going to buy a new machine to replace the old one which was exhausted. There are two machines P and Q. Both machines generate same production and have life of 10 years. The costs of machine P and Q are $10,000 and $9,000 respectively. The annual maintenance costs (excluding depreciation) for machines P and Q are $800 and $1,200 respectively. Company follows straight line method to depreciate its assets. Applicable tax rate of the company is 40%. Cost of capital of the company is 12%. What is the EAC of machine P and EAC of machine Q and Which machine should be selected by company Smart?

(a) $1,369.84 and $1,232.86, Machine Q should be selected. (b) $2.249.84 and $2,312.86, Machine Q should be selected.

(c) $1,849.84 and $1,952.86, Machine P should be selected.

(d) $1,800.00 and $2,100.00, Machine P should be selected.