(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 $50,000, last for 8 years, and produce annual cash flows of

$16,000 per year. The alternative is the deluxe, award-winning Smoke-alator, which costs $78,000 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 Smoke-alator or standard smoker . (Select from the drop-down menu.)