Question: Two machines, A and B, which perform the same functions, have the following costs and lives. Machine A: PV of costs = $55,000; Life of

Two machines, A and B, which perform the same functions, have the following costs and lives. Machine A: PV of costs = $55,000; Life of usage = 8 years. Machine B: PV of costs = $72,000; Life of usage = 11 years. The two machines are mutually exclusive and the cost of capital is 12 percent. Which machine would you choose? Machine A, because the Equivalent Annual Cost is $11,071.66 Machine B, because the Equivalent Annual Cost is $12.125.91 Machine A, because the Equivalent Annual Cost is $6,545.46 Machine B, because the Equivalent Annual Cost is $11,071.66

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