$*"$You are given the following information about equipment that is required for your business. Assume that the equipment will be replaced as it wears out and that straight$-$line

depreciation to zero is used for each. The required return is $15\%$ and ignore taxes. Machine A has an initial cost of $$200,000,$ an operating cost per year of $$15,000,$ and an ex$-$

pected life of $8$ years. Machine B has an initial cost of $$300,000,$ an operating cost per year of $$17,500,$ and an expected life of $10$ years. How does the equivalent annual cost of

Machine A compare to that of Machine B$?$

$($I$)$ Choose one of the following answers

Machine $A$ is cheaper than Machine $B$ by $$12,705\mathrm{.}60$ per year

Machine $B$ is cheaper than Machine $A$ by $$12,705\mathrm{.}60$ per year

Machine $A$ is cheaper than Machine $B$ by $$17,705\mathrm{.}60$ per year

Machine $B$ is cheaper than Machine $A$ by $$17,705\mathrm{.}60$ per year