Central Hydraulics is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 10 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $315,000, annual operating costs of $20,000, and a 3-year life. Machine B costs $216,000, has annual operating costs of $30,000, and a 2-year life. The firm currently pays no taxes. Which machine should be purchased and why?
A. Machine A; because it will save the company about $9,600 a year
B. Machine A; because it will save the company about $7,791 a year
C. Machine B; because it will save the company about $11,202 a year
D. Machine B; because it will save the company about $6,315 a year
E. Machine B; because it will save the company about $13,398 a year