Given the following costs of operating two machines and an 8% cost of capital, select

the lower-cost machine using the equivalent annual annuity method. Calculate EAA of

each project and select one with lowest costs.

Co C1 C2 C3 NPV

Machine 1 -$3,000 -$800 -$800 -$800 -$5,062

Machine 2 -$2,000 -$1,300 -$1,300 -$4,318