"Cost of new machinery (life span of 10 years) - $1 850,000"

This is unclear. Is it a single, initial cost or a cost somehow spread over the 10 years?

"Annual fixed cost including depreciation - $555,000 "

Kind of an irritating hint. Get the depreciation out of there and track it separately.

"Annual variable costs $40,000"

That's just plain silly. You're using a level assumption for "variable" costs?

You reported no salvage value, so Straight Line Depreciation is trivial.

$1,850,000/10 = $185,000 = Annual Depreciation

This makes other fixed annual costs $555,000 - $185,000 = $370,000

Well, line it all up in a spreadsheet, calculate the taxes, and calculate the present value.

The other investment if far simpler. Let's see what you get.