You have been asked to evaluate two machines. The benefits from ownership are identical. Machine A costs $300 to buy and install, lasts for 5 years, and costs $160 per year to operate. Machine B costs $500, lasts for 5 years, and costs $120 per year to operate. Both machines have zero salvage value. Assuming that this is a one-time acquisition, which machine do you recommend if the cost of capital is 15%?

Multiple Choice

Machine B, the PV is $66 more than Machine A.

Machine A, the PV of its costs is $66 less than Machine B.

Machine B, the PV of its costs is $66 less than Machine A.

Machine A, the PV is $66 more than Machine B.

Machine A, because the project length is two years less than Machine B.