(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 $85,000 to purchase, while alternative B will cost only $65,000. Moreover, the two alternatives will have very different cash flows and useful lives. The after-tax costs for the two projects are as follows:

Year / Alternative A / Alternative B

0 $(85,000) $(65,000) 1 $(16,000) $(6,500) 2 $(16,000) $(6,500) 3 $(16,000) $(6,500) 4 $(16,000) 5 $(16,000) 6 $(16,000) 7 $(16,000)

a. Calculate each project's EAC, given a discount rate of 10%

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

a. Alternative A's EA) at a discount rate of 10% is $( ) (Round to the nearest cent.)

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