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You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $175

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $175 initially, and then $80 per year in maintenance costs. Machine B costs $245 initially, has a life of three years, and requires $195 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine.

The discount rate is 11 percent and the tax rate is zero. Calculate the EAC

Machine A EAC=

Machine B EAC=

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