38. Ruff Motors needs to select an assembly line for producing their new SUV. They have two options:

    • Option A is a highly automated assembly line that has a large up-front cost but low maintenance cost over the years. This option will cost $9 million today with a yearly operating cost of $2 million. The

      assembly line will last for 5 years and be sold for $5 million in 5 years.

    • Option B is a cheaper alternative with less technology, a longer life, but higher operating costs. This

      option will cost $5 million today with an annual operating cost of $2.5 million. This assembly line will last for 8 years and be sold for $1 million in 8 years.

      The firms cost of capital is 12%. Assume a tax rate of zero percent. The equivalent annual cost (EAC) of better option should be $_______ million.