The following costs are estimated for two equal service tomato-peeling machines to be evaluated by a canning plant manager. If the cost of capital is 12% per year, help the manager decide which machine to select by computing and comparing the EAC of the two machines.

Cost: $45,000 Annual maintenance cost: $18,000 Annual labor cost: S24,000 Salvage value: $8,000 Life: 5 years Costs: $40,000 Annual maintenance cost: S13,000 Annual labor cost: $25,000 Salvage value: S10,000 Life: 8 years