In: Finance
(Equivalent annual annuity)
Rib & Wings-R-Us is considering the purchase of a new smoker oven for cooking barbecue, ribs, and wings. It is looking at two different ovens. The first is a relatively standard smoker and would cost $52,000, last for 9 years, and produce annual cash flows of $15,000 per year. The alternative is the deluxe, award-winning Smoke-alator, which costs $77,000 and, because of its patented humidity control, produces the "moistest, tastiest barbecue in the world." The Smoke-alator would last for 11 years and produce cash flows of $23,000 per year. Assuming a required rate of return of 10 percent on both projects, compute their equivalent annual annuities (EAAs)
The EAA of the standard smoker is $ ____. (Round to the nearest dollar.)
The EAA of the Smoke-alator is $____. (Round to the nearest dollar.)
Rib & Wings-R-Us should purchase the _____?