Problem:
Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $2,110,000 and will last for 6 years. Variable costs are 38 percent of sales and fixed costs are $129,000 per year. Machine B costs $4,240,000 and will last for 10 years. Variable costs for this machine are 26 percent of sales and fixed costs are $128,000 per year. The sales for each machine will be $8,480,000 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. If the company plans to replace the machine when it wears out on a perpetual basis, the EAC for machine A is______ $ and the EAC for machine B is____ $ . Therefore, you should choose machine . (Negative amount should be indicated by a minus sign. Round your answer to the nearest whole dollar amount, e.g. 32.)