Comparing Mutually Exclusive Projects Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,100,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $204,000 per year. Machine B costs $6,100,000 and will last for nine years. Variable costs for this machine are 30 percent and fixed costs are $165,000 per year . The sales for each machine will be #13.5 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis. If the company plans to replace the machines when it wears out on a perpetual basis, which machine should you choose? Show all steps.