Overton clothes Inc, is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: a) Machine 171-3, which has a cost of $171,000, a 3 year expected life, and after tax cash flows ( labor savings and depreciation) of $85,000 per year and b) Machine 356-6 which has a cost of 356,000, a 6 year life, and after tax cash flows of 102,400 per year .Assume that both projects can be repeated. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components(microprocessors) used in the machines. Assume that Overton's WACC is 13%. Using the replacement chain and EAA approaches , which model should be selected? Why?