You are evaluating two different machines.

$$ Machine A costs $$1,000,000,$ has a three$-$year life with expected

salvage value in three years of $$448,000,$ and has pre$-$tax operating

costs of $$150,000$ per year.

$$ Machine B costs $$1,200,000,$ has a five$-$year life with expected

salvage value in five years of $$344,064,$ and has pre$-$tax operating

costs of $$200,000$ per year.

$$ Both machines are in Class $8($CCA rate of $20$ percent per year$).$

$$ If your tax rate is $40$ percent and your discount rate is $10$ percent,

compute the EAC $($equivalent annual cost$)$ for both machines.

Which do you prefer?