Question: You have been asked to evaluate two different machines and provide a recommendation to your boss. Machine A costs $200,000 up front, has a 6-year

You have been asked to evaluate two different machines and provide a recommendation to your boss. Machine A costs $200,000 up front, has a 6-year life, and an annual after-tax OCF of negative $15,000 per year. Machine B costs $140,000 up front, has a 4-year life, and an annual after-tax OCF of negative $12,000. If the discount rate is 8 percent, what is the equivalent annual cost of each machine? What machine should you purchase?

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