Hoover Corporation is considering the purchase of a machine to be used for its inventory storage system. Hoover can buy two alternative machines, A or B. Machine A costs $49,000 to purchase and install, has a 5-year life, and will be depreciated over 5 years on a straight-line basis to a book value of $4,000. At the end of the 5 years, Hoover expects to be able to sell machine A for $10,000. For the expected production level, it will cost $25,000 per year to operate machine A. The relevant tax rate is 40%, and the project's cost of capital is 12%. Machine B has a 10-year life but costs $72,000 to purchase and install. It will be depreciated over 8 years on a straight-line basis to a book value of zero. Machine B is expected to require an overhaul at the end of year 6 that will cost $18,000 -- that overhaul will be expensed, not capitalized. At the end of the 10 years, Hoover expects to be able to sell machine B for a scrap value that will equal the cost of removal and cleanup. Machine B is slightly less expensive to run than machine A, costing $24,000 per year to operate. a). Calculate the present value of the costs of purchasing and operating machine A. b). Calculate the present value of the costs of purchasing and operating machine B. c). Calculate the Equivalent Annual Cost (EAC) of A and B. d). Which machine should Hoover purchase?