Question: You are evaluating two different milling machines to replace your current aging machine. Machine A costs $233,206, has a three-year life, and has pretax operating

You are evaluating two different milling machines to replace your current aging machine. Machine A costs $233,206, has a three-year life, and has pretax operating costs of $67,616 per year. Machine B costs $386,286, has a five-year life, and has pretax operating costs of $34,073 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $42,593. Your tax rate is 34 % and your discount rate is 10 %.

What is the EAC for Machine A?

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