Rib & Wings-R-Us is consideri
Rib & Wings-R-Us is considering the purchase of a newsmoker oven for cooking barbecue, ribs, and wings. It is lookingat two different ovens. The first is a relatively standard smokerand would cost $50,000, last for 8 years, and produce annual cashflows of $16,000 per year. The alternative is the deluxe,award-winning Smoke-alator, which costs $78,000 and, because ofits patented humidity control, produces the “moistest, tastiestbarbecue in the world.” The Smoke-alator would last for 11 yearsand produce cash flows of $23,000 per year. Assuming a requiredrate of return of 10 percent on both projects, compute theirequivalent annual annuities (EAAs).
The EAA of the standard smoker is __. (Round to the nearestdollar.)
The EAA of the Smoke-alator is __. (Round to the nearestdollar.)
Rib & Wings-R-Us should purchase the __
Answer:
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