19. Solatron is trying to decide between two different types of production lines for its new solar panel manufacturing facility. They plan to make and sell solar panels indefinitely, so if a production line wears out it must be replaced.

	Option A	Option B
Cost	$200,000	$300,000
Useful Life	4 years	6 years
Pretax annual operating costs	$70,000	$50,000

Solatron uses straight-line depreciation, has a tax rate of 40% and uses a discount rate of 10%.

A. What is the Operating Cash Flow for Option A and Option B?

B. What is the Equivalent Annual Cost for Option A?

C. What is the Equivalent Annual Cost for Option B?

D. Which option should Solatron select? Why?