You are evaluating two different silicon wafer milling machines. The Techron I costs $273,000, has a 3-year life, and has pretax operating costs of $74,000 per year. The Techron II costs $475,000, has a 5-year life, and has pretax operating costs of $47,000 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $51,000. If your tax rate is 25 percent and your discount rate is 11 percent, compute the EAC for both machines.

Which machine do you prefer?