Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine...

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Vandalay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $2,140,000 and willlast for 6 years. Variable costs are 37 percent of sales, and fixedcosts are $165,000 per year. Machine B costs $4,390,000 and willlast for 10 years. Variable costs for this machine are 30 percentof sales and fixed costs are $114,000 per year. The sales for eachmachine will be $8.78 million per year. The required return is 10percent and the tax rate is 35 percent. Both machines will bedepreciated on a straight-line basis.
Required:
(a)
If the company plans to replace the machine when it wears out ona perpetual basis, what is the EAC for machine A? (Do notround your intermediate calculations.)
(b)
If the company plans to replace the machine when it wears out ona perpetual basis, what is the EAC for machine B? (Do notround your intermediate calculations.)

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Vandalay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $2,140,000 and willlast for 6 years. Variable costs are 37 percent of sales, and fixedcosts are $165,000 per year. Machine B costs $4,390,000 and willlast for 10 years. Variable costs for this machine are 30 percentof sales and fixed costs are $114,000 per year. The sales for eachmachine will be $8.78 million per year. The required return is 10percent and the tax rate is 35 percent. Both machines will bedepreciated on a straight-line basis.Required:(a)If the company plans to replace the machine when it wears out ona perpetual basis, what is the EAC for machine A? (Do notround your intermediate calculations.)(b)If the company plans to replace the machine when it wears out ona perpetual basis, what is the EAC for machine B? (Do notround your intermediate calculations.)