Specialty Clothing Corporation is considering the purchase of two machines for their ongoing operations. When a machine is worn out, it will be replaced with another machine, since it is integral to the operations of the business. The discount rate is 9%. The CFO has collected the following information on two possible choices:

Machine A Machine B

Initial cost 220,000 190,000

Useful Life 17 years 20 years

Annual maintenance 1,900 3,000

Calculate the equivalent annual cost of each machine.

EAC A _______________ EAC B _________________

Which machine should Specialty Clothing Corporation choose? ____________