Business, 17.11.2020 01:00 mikkilynnpeace1982

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $1,950,000 and will last for 6 years. Variable costs are 37 percent of sales, and fixed costs are $146,000 per year. Machine B costs $4,220,000 and will last for 9 years. Variable costs for this machine are 29 percent of sales and fixed costs are $79,000 per year. The sales for each machine will be $8.44 million per year. The required return is 10 percent and the tax rate is 35 percent. Both machines will be depreciated on a straight-line basis. Required:
(a)
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine A? (Do not round your intermediate calculations.)

(Click to select)$-4,159,018.5$-3,762,921.5$- 10,708,298.61$3,027,295.61$-2,458,7 04.39

(b)
If the company plans to replace the machine when it wears out on a perpetual basis, what is the EAC for machine B? (Do not round your intermediate calculations.)

(Click to select)$-12,732,867.43$-7,260,992.5 1$3,275,058.04$-2,210,941.96$-8,025 ,307.51

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