Ja Ltd. is considering the purchase of a new equipment to produce headphones. Equipment X cost $3 500 000 and will last for four years, its variable cost is 25 percent of sales, and its fixed cost is $189 000 per year. Equipment Y cost $6 700 000 and will last for seven years, its variable cost is 35 percent of sales, and its fixed cost is $450 000 per year. Suppose the sales for each equipment will be $18 000 000 per year. The discount rate is 5 percent, tax rate is 35 percent and both equipment will be depreciated on a straight-line basis over their life. If Ja Ltd. plans to replace the equipment when it wears out on perpetual basis, which equipment should it choose and why?