Problem $12\mathrm{.}16($Replacement Chain$)$

The Lesseig Company has an opportunity to invest in one of two mutually exclusive machines that will produce a product the company will need for the next $8$ years.

Machine A has an after$-$tax cost of $$8\mathrm{.}3$ million but will provide after$-$tax inflows of $$5$ million per year for $4$ years. If Machine A were replaced, its after$-$tax cost would be

$$10\mathrm{.}2$ million due to inflation and its after$-$tax cash inflows would increase to $$5\mathrm{.}3$ million due to production efficiencies. Machine $B$ has an after$-$tax cost of $$13\mathrm{.}3$ million and

will provide after$-$tax inflows of $$3\mathrm{.}7$ million per year for $8$ years. If the WACC is $15\%,$ which machine should be acquired? Explain. Enter your answers in millions. For

example, an answer of $$10,550,000$ should be entered as $10\mathrm{.}55.$ Do not round intermediate calculations. Round your answers to two decimal places.