Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,810,000 and will last for 3 years. Variable costs are 38 percent of sales, and fixed costs are $169,000 per year. Machine B costs $4,460,000 and will last for 5 years. Variable costs for this machine are 30 percent of sales and fixed costs are $77,000 per year. The sales for each machine will be $8.92 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.

(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.)

$-4,107.519.5 $-3,716,327.17 $-2,829,751.13 $-7,037172.23 $2,968.248.87 $-11-150,930.42 $3,144,213.24 $-2,653,786.76 $-10,059,939.76 $-10,088,937.04