Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,860,000 and will last for 5 years. Variable costs are 40 percent of sales, and fixed costs are $166,000 per year. Machine B costs $4,410,000 and will last for 7 years. Variable costs for this machine are 29 percent of sales and fixed costs are $89,000 per year. The sales for each machine will be $8.82 million per year. The required return is 10 percent and the tax rate is 21 percent. Both machines will be depreciated on a straight-line basis.

If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A ((a)-3,330,803.31 (b) 3,636,996.69 (c) -12,626,365.14 (d) -3,497,343.48 (e) -3,164,263.15

If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B ((a) -2,864,510.25 (b) -13,945,635.62 (c) 4,103,289.75 (d) -3,007,735.77 (e) -2,721,284.74