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

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Vandelay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $3,250,000 and willlast for six years. Variable costs are 35 percent of sales, andfixed costs are $390,000 per year. Machine B costs $5,507,000 andwill last for nine years. Variable costs for this machine are 30percent of sales and fixed costs are $260,000 per year. The salesfor each machine will be $12.8 million per year. The requiredreturn is 10 percent, and the tax rate is 23 percent. Both machineswill be depreciated on a straight-line basis. The company plans toreplace the machine when it wears out on a perpetual basis.
Calculate the EAC for each machine. (A negative answershould be indicated by a minus sign. Do not roundintermediate calculations and enter your answersin dollars, not millions of dollars, rounded to 2decimal places, e.g., 1,234,567.89.)

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Vandelay Industries is considering the purchase of a new machinefor the production of latex. Machine A costs $3,250,000 and willlast for six years. Variable costs are 35 percent of sales, andfixed costs are $390,000 per year. Machine B costs $5,507,000 andwill last for nine years. Variable costs for this machine are 30percent of sales and fixed costs are $260,000 per year. The salesfor each machine will be $12.8 million per year. The requiredreturn is 10 percent, and the tax rate is 23 percent. Both machineswill be depreciated on a straight-line basis. The company plans toreplace the machine when it wears out on a perpetual basis.Calculate the EAC for each machine. (A negative answershould be indicated by a minus sign. Do not roundintermediate calculations and enter your answersin dollars, not millions of dollars, rounded to 2decimal places, e.g., 1,234,567.89.)