(Calculating EAC) Barry Boswell is a financial analyst for Dossman Metal Works, Inc. and he is analyzing two alternative configurations for the firm's new plasma cutter shop. The two alternatives, denoted A and B below, will perform the same task, but alternative A will cost $80,000 to purchase, while alternative B will cost only$ 55,000.Moreover, the two alternatives will have very different cash flows and useful lives. The after-tax costs for the two projects are as followed.

.

Year	Alternative A		Alternative B
0	$(80,000)		$(55,000)
1	(20,000)		(6,000)
2	(20,000)		(6,000)
3	(20,000)		(6,000)
4	(20,000)
5	(20,000)
6	(20,000)
7	(20,000)

a. Calculate each project's EAC, given a discount rate of

10 percent.

b. Which of the alternatives do you think Barry should select? Why?