Calculating EAC You are evaluating two different silicon wafer milling machines. The Techron I costs $245,000, has a three-year life, and has pretax operating costs (i.e., variable costs and fixed costs) of $39,000 per year. The Techron II costs $315,000, has a five-year life, and has pretax operating costs of $48,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $20,000. If your tax rate is 35 percent and your discount rate is 9 percent, compute the EAC for both machines. Which do you prefer? Why? 6. Hint]: For each option, 1) you need to construct a time table with after-tax cash flow information as you do for NPV analysis in questions #243; 2) Get total cash flow information every year, 3) EAC-EAA (equivalent annual annuity (i.e., PMT) that we covered in class last week); 4) if your NPV is a negative number, it would mean your EAA is a negative number, it's a cost to you. Which option would you choose if you need to pick one