Exam$-3(07/12)$

$110$ points

Suppose that Sally's Doughnut Shop is considering purchasing one of two machines. Machine A is a dough mixing machine that has a useful life of $3$ years. The machine has an initial cost of $$100$ and cash inflows of $$30,$ and $$70,$$$60$ the next three years, respectively. Machine $B$ is an icing machine with a useful life of $2$ years. The machine has an initial cost of $$100$ and cash inflows of $$60$ and $$75$ for the next two years, respectively. Sally's Doughnut Shop has a cost of capital of $8\%.$ What is the Equivalent Annual Annuity $($EAA$)$ of Machine A$?$

$$11\mathrm{.}13$

$$13\mathrm{.}74$

$$9\mathrm{.}12$

$$10\mathrm{.}17$