Samir heads a team to select from two different machines to replace an aging one. Their upfront costs, such as installation, are different. Also their useful lives are 4 years and 5 years respectively. Their salvage values, operating costs and net benefits are different. Nonetheless, they each have pros and cons to consider.

Tammy, a junior engineer, has suggested using the equivalent annual annuity (EAA) method to compare each machines financial attributes.

Describe how the EAA method works by creating an example using the two projects above. Show your work.