Q13) Firm is considering the replacement of its equipment. Two new models are available. Model A has a cost of $400,000; five-year expected life and annual after-tax savings of $120,000. Model B has a cost of $600,000, an eight-year life and annual after-tax savings of $130,000. No new technological developments are expected. The cost of capital is 11%. Should the firm replace its equipment with Model A or B?