KDM Inc. has additional cash available for investment. One of the production machines needs to be replaced, and management is considering two options. Both options require a similar initial outlay and have a useful life of 10 years. However, one of the machines will generate $30,000 annually in positive after-tax cash flows and would have an after-tax residual value of $50,000. The other option will generate $25,000 annually in positive after-tax cash flows and would have an after-tax residual value of $100,000. Using a discount rate of 8%, which option is the most attractive? (Use the appropriate discount factor from Appendix A.)