You need to choose between two machines based on the following information:

Machine $1$ has a $4$ year life, costs $$322,500$ with pre$-$tax operating costs of $$64,500$

per year. Machine $2$ has a $3$ year life, costs $$425,250$ with pre$-$tax operating costs of

$$39,600$ per year. Both machines have a salvage value of $$22,500$ and are classed

with a CCA rate of $18\%$ per year. The company tax rate is $30\%$ and the discount

rate is $10\%.$

a$)$ What is the EAC?

b$)$ Which machine would you select as an investment?

Answer

Place only your final answer in the box.

Show your work here $($mandatory$)$: