Question 3

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3048000 and will last for six
years. Variable costs are 40 percent of sales and fixed costs are $195000 per year. Machine B costs $5229000 and will last for nine years. Variable costs
for this machine are 35 percent of sales and fixed costs are $130000 per year. The sales for each machine will be $10.1 million per year. The required return
is 11 percent and the tax rate is 30 percent. Both machines will be depreciated on a straight-line basis. The company plans to replace the machine when it
wears out on a perpetual basis.

Calculate the NPV for each machine. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g. 32.16))

NPV

Machine A

??$

Machine B

??$

EAC

Machine A

??$

Machine B

??$