Cash flows ($ thousands) Machine Co C1 C2 C3 A -100 +110 +121

B -120 +110 +121 +133

Machines A and B are mutually exclusive and are expected to produce the following real cash flows. Calculate the equivalent annual cash flow from each machine and decide which machine you should buy. Assume the cost of capital is 5%.

(a) A: 67.59 / B: 66.23 / Choose A

(b) A: 61.59 / B: 76.89 / Choose B

(c) A: 33.54 / B: 37.46 / Choose B

(d) A: 36.22 / B: 32.37 / Choose A