Your firm is forced to choose between two machines, A and B. the two machines are perfect substitutes in terms of what they do yet they are different in design and cost. Machine A costs $150,000 and lasts for two years with an operating cost of $25,000 per year. Machine B costs $140,000, has a life of 3 years, and needs $46,000 a year to run. assume that the company's cost of capital is 8%

1. which machine should the company choose?

a- the EACF of A is $106,815.53 the EACF of B is 98,375.37 and A is better

b- the EACF of A is $106,815.53 the EACF of B is 98,375.37 and B is better

c- the EACF of A is $109,115,38 the EACF of B is 100,324.69 and A is better

d- the EACF of A is $106,815.53 the EACF of B is 104,287.32 and A is better

e- the EACF of A is $109,115,38 the EACF of B is 100,324.69 and A is better

2. suppose because of technological development new machines each year cost 20% less to buy and operate. What would be the equivalent rent of machine A in year 1?

a- 119,921.83

b- 120,723.40

c- 121,964.53

d- 118,301.08

e- 128,658.23

3. What is the equivalent rent of machine B in year 1 and which machine is better?

a- 119,921.83 and A is better

b- 120,723.40 and B is better

c- 121,964.53 and A is better

d- 118,301.08 and B is better

e- 128,658.23 and B is better