The manager of ABC INC. is evaluating two machines. It is assumed that neither machine has impacts on sales.

Machine I costs $420,000 and it has a eight-year life. It has pre-tax operating costs of $310,000 per year.

Machine II costs $630,000 and it has a fifteen-year life. It has pre-tax operating costs of $220,000 per year.

For both machines, we use straight-line depreciation to zero over the machines life. The pre-tax salvage values of Machine I and Machine II are both assumed to be zero at the end of its life. The marginal tax rate is 23% and the appropriate discount rate is 15%.

What is the equivalent annual cost (EAC) for each machine?