Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,940,000 and will last for 5 years. Variable costs are 39 percent of sales, and fixed costs are $176,000 per year. Machine B costs $4,640,000 and will last for 7 years. Variable costs for this machine are 27 percent of sales and fixed costs are $128,000 per year. The sales for each machine will be $9.28 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.)

(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.)