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	($2,200)	($2,300)
1-2	1,826
1-3		1,204
NPV at 12%	886	592

1) Determine which model should be purchased using the Replacement Chain (RC) method. (5 points)

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