Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,910,000 and will last for 6 years. Variable costs are 34 percent of sales, and fixed costs are $135,000 per year. Machine B costs $4,300,000 and will last for 8 years. Variable costs for this machine are 26 percent of sales and fixed costs are $118,000 per year. The sales for each machine will be $8.6 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?

-2,788,310.10

$4,005,689.90

$-12,143,817.38

$-2,927,725.60

$-2,648,894.59

If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B?

-2,552,794.28

$-13,618,969.06

$4,241,205.72

$-2,680,433.99

$-2,425,154.56