Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,054,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $200,000 per year. Machine B costs $5,238,000 and will last for nine years. Variable costs for this machine are 30 percent and fixed costs are $135,000 per year. The sales for each machine will be $10.2 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. The company plans to replace the machine when it wears out on a perpetual basis.

Calculate the NPV for each machine. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Machine A	$
Machine B	$

Calculate the EAC for each machine. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	EAC
Machine A	$
Machine B	$

Which machine should you choose?

	Machine B
	Machine A