European Products is considering the purchase of one of two machines that is integral to their business and will be replaced when it is worn out. The company uses a discount rate of 8% for its investments. Compute the equivalent annual cost of Machine A and Machine B.

Machine A Machine B

Initial cost 200,000 175,000

Useful life 13 years 11 years

Annual maint 3,500 4,000

Which of the following is true about the Eqivalent Annual Cost computation?

Group of answer choices

Both machines could be purchased if it is cost effective to do so.

The useful lives of the two machines is the same.

The initial cost of the two machines is the same.

There is no annual maintenance to be considered.

The discount rate to be used for both computations is the sam