The B.T. Knight Corporation is considering two mutually exclusive pieces of machinery that perform the same task. The two alternatives available provide the following set of after-tax net cash flows:

Year	Equipment A	Equipment B
0	($3,100)	($3,380)
1-3	1,426
1-4		1,204
NPV at 11%	385	355

1. Determine which model should be purchased using the Replacement Chain (RC) method.

2. Calculate the equivalent annual annuity (EAA) for each model.