The table below details three possible alternatives to replace existing machinery. The life of each alternative is 5 years. Assuming the cost of capital is 10%, depreciation for tax purposes of capital expenditure is allowable at 30% on a declining balance basis and the effective tax rate is 45%. Determine the preferred alternative.

Alternative	Capital expendature	Annual operating cost	Salvage value
A	$700,000	$200,000	$100,000
B	$900,000	$130,000	$150,000
C	$1,300,000	$70,000	$300,000