Question: you are considering the purchase of one of two machines...

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $170 initially, and then $85 per year in maintenance costs. Machine B costs $240 initially, has a life of three years, and requires $190 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. The discount rate is 12 percent and the tax rate is zero. Calculate the EAC.