Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,820,000 and will last for 6 years. Variable costs are 36 percent of sales, and fixed costs are $130,000 per year. Machine B costs $4,310,000 and will last for 10 years. Variable costs for this machine are 28 percent of sales and fixed costs are $87,000 per year. The sales for each machine will be $8.62 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis. Required:

(a) If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? (Do not round your intermediate calculations.)

A) $3,189,701.23 B) $-10,510,545.27 C) $-2,413,298.77 D) $-4,006,184 E) $-3,624,642.67

(b) If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? (Do not round your intermediate calculations.)

A) $3,427,027.35 B) $-2,175,972.65 C) $-13,370,409.98 D) $-10,007,048.04 E)-9,053,995.84