Old Southwest Canning Co. has determined that any one of four machines can be used in its chili-canning operation. The cost of the machines are estimated below, and all machines have a 5-year life. If the minimum attractive rate of return is 25% per year, determine which machine should be selected on the basis of a rate of return analysis.

Machine First Cost, $ AOC, $

1 28,000 20,000

2 51,000 12,000

3 32,000 19,000

4 33,000 18,000

Machine (Click to select) should be selected.