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Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $ 2 . 9 million and will

Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2.9 million and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $210,000 per year. Machine B costs $5.8 million and will last for nine years. Variable costs for this machine are 30 percent of sales and fixed costs are $245,000 per year. The sales for each machine will be $13 million per year. The required return is 10 percent, and the tax rate is 24 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 EAC for each machine.

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