Question
(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
(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 8 years, and produce annual cash flows of $19000 per year. The alternative is the deluxe, award-winning Smoke-alator, which costs $80,000 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 $21,000 per year. Assuming a required rate of return of 12 percent on both projects, compute their equivalent annual annuities (EAAs).
The EAA of the standard smoker is ___?
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