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A company is evaluating two machines. Both machines meet the company’s quality standard. Machine A costs...

A company is evaluating two machines. Both machines meet the company’s quality standard. Machine A costs $40 000 initially and $1000 per year to maintain. Machine B costs $24 000 initially and $2000 per year to maintain. Machine A has a six-year useful life and Machine B has a three-year useful life. Both machines have zero salvage value. Assume the company will continue to replace worn-out machines with similar machines and that the discount rate is 7%. Which machine should the company purchase?

Select one: a. Machine A

b. Machine B

c. There is not enough information to answer the question.

d. The company is indifferent to the two machines.

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