Q10. Padano Pizza Ltd is considering the purchase of a new pizza oven. It is looking at two different ovens. The first is a relatively standard oven and would cost 60,000, last for 8 years, and produce annual cash flows of 16000 per year. The alternative is the deluxe, award- winning oven, which costs 78,000. The deluxe oven would last for 11 years and produce cash flows of 18,000 per year. Assuming 10 percent required rate of return on both projects, compute their equivalent annual annuity (EAA). Which oven you would recommend to purchase?

Q10. Padano Pizza Ltd is considering the purchase of a new pizza oven. It is looking at two different ovens. The first is a relatively standard oven and would cost 60,000, last for 8 years, and produce annual cash flows of 16000 per year. The alternative is the deluxe, award- winning oven, which costs 78,000. The deluxe oven would last for 11 years and produce cash flows of 18,000 per year. Assuming 10 percent required rate of return on both projects, compute their equivalent annual annuity (EAA). Which oven you would recommend to purchase