A firm is considering the purchase of one of two new machines. The data on each are as follows:

Machine A Machine B
Initial cost $3,400 $6,500
Service life 3 Years 6 Years
Salvage Value $100 $500
Net operating cost after taxes $2,000/year $1,800/year
If the firm's MARR is 12%, which alternative should be selected when using the following methods:

a. Annual equivalent cost approach

b. Present-worth comparison