Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,830,000 and will last for 6 years. Variable costs are 36 percent of sales, and fixed costs are $156,000 per year. Machine B costs $4,490,000 and will last for 8 years. Variable costs for this machine are 28 percent of sales and fixed costs are $112,000 per year. The sales for each machine will be $8.98 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.)
	Option 1: $ -3,729,671.5 Option 2: $ -4,122,268.5 Option 3: $ -10,958,495.77 Option 4: $ 3,320,848.49 Option 5: $ -2,516,151.51

(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.)
	Option 1: $-6,680,937.98 Option 2: $-7,384,194.61 Option 3: $-2,352,346.14 Option 4: $3,484,653.86 Option 5: $-12,549,593.04