Problem:

You are evaluating two different silicon wafer milling machines. The Techron I costs $219,000, has a three-year life, and has pretax operating costs of $56,000 per year. The Techron II costs $385,000, has a five-year life, and has pretax operating costs of $29,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $33,000.

Required:

Question: If your tax rate is 34 percent and your discount rate is 8 percent, compute the EAC for both machines.

Note: Please describe comprehensively and provide step by step solution.