Hydro One is evaluating buying two different transforms. Transformer #1: costs $370,000 has a 3 year life, has pre-tax operating cost of $80,000 per year. Transformer #2: costs $475,000 has a 5 year life, has pre-tax operating cost of $30,000 per year. Both transformers are Class 8 (CCA rate of 20% per year) and both have a savage value of $40,000. The firms tax rate is 35% and discount rate is 10% What is the EAC for Transformer #1?

Select one: a. $54,373.83 b. $156,869.13 c. $131,847.83 d. $85,838.93 e. $163,356.46