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You are considering the purchase of one of two machines. Machine X has a life of 2 years. Machine X costs $100 initially and then $50 per year in maintenance. Machine Y has a life of 3 years. Machine Y has an initial cost of $80 and it requires $40 maintenance per year. Both machines must be replaced at the end of their lives. Assume the discount rate is 12% and there are no taxes. What are the relative EAC's and which is the better machine for the firm to purchase?
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