Filkins Fabric is considering the replacement of its old machine with a new modern one. The new machine costs $10 million and will provide after-tax inflows of $4 million per year for 4 years. What is the equivalent annual annuity (EAA) for the machine if the cost of capital is 10%?

Options:

$0.85 million

$1.00 million

$1.25 million

$1.50 million

$6.00 million