The General Manager of Plsticos Dormn, a manufacturer of PVC pipes for water, is considering introducing a new production line for the manufacture of drain pipes for rainwater. For this purpose, the production department has presented to the Board of Directors of the company, two molding machines that carry out the same process:

Machine A performs conventional injection molding. It has an initial cost estimated at $ 1.75 million. The cost of inspection, maintenance and cleaning of the molds is expected to be $ 2,500 per quarter for the first three years; From the fourth year on, the costs would increase by $ 500 each quarter until year 6. From this year on, the costs would remain constant until the end of their useful life. It is expected that at the end of the useful life of the machinery, the salvage or residual value will be 15% of the initial investment.

The other proposal, that is, machine B involves the use of an innovative process known as composite metal. The machine will have an initial cost of $ 1.25 million, and its quarterly operating and maintenance costs will be higher, that is, $ 30,000 per quarter for the first 4 years, from year 5 the costs would increase 12% each quarter until year 7; thereafter, the costs would remain constant until the end of the evaluated period. This proposal has no salvage value.

The production manager considers that both machines could be used for a period of 10 years. a) If the finance department has established that the interest rate used to evaluate investment proposals is 8% per annum, compounded quarterly, what machine should the company's board of directors choose?