Rib? & Wings-R-Us is considering the purchase of a new smoker oven for cooking? barbecue, ribs,...

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Rib? & Wings-R-Us is considering the purchase of a newsmoker oven for cooking? barbecue, ribs, and wings. It is lookingat two different ovens. The first is a relatively standard smokerand would cost $ 50,000, last for 7 years, and produce annual cashflows of $ 15,000 per year. The alternative is the? deluxe,award-winning? Smoke-alator, which costs $ 80,000 and, because ofits patented humidity? control, produces the? "moistest, tastiestbarbecue in the? world." The? Smoke-alator would last for 13 yearsand produce cash flows of $ 22,000 per year. Assuming a requiredrate of return of 10 percent on both? projects, compute theirequivalent annual annuities (EAAs?).
The EAA of the standard smoker is $. (Round to the nearest?dollar.) ANSWER:
The EAA of the? Smoke-alator is $. (Round to the nearest?dollar.) ANSWER:
Rib? & Wings-R-Us should purchase the Smoke-alator orstandard smoker. ANSWER:

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Equivalent Annual Annuity EAA of the standard smoker Period Annual Cash Flow Present Value factor at 10 Present Value of Cash Flow 1 15000 0909091 13636 2 15000 0826446 12397 3 15000 0751315 11270 4 15000 0683013 10245 5 15000 0620921 9314 6 15000 0564474 8467 7 15000 See Answer

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Rib? & Wings-R-Us is considering the purchase of a newsmoker oven for cooking? barbecue, ribs, and wings. It is lookingat two different ovens. The first is a relatively standard smokerand would cost $ 50,000, last for 7 years, and produce annual cashflows of $ 15,000 per year. The alternative is the? deluxe,award-winning? Smoke-alator, which costs $ 80,000 and, because ofits patented humidity? control, produces the? "moistest, tastiestbarbecue in the? world." The? Smoke-alator would last for 13 yearsand produce cash flows of $ 22,000 per year. Assuming a requiredrate of return of 10 percent on both? projects, compute theirequivalent annual annuities (EAAs?).The EAA of the standard smoker is $. (Round to the nearest?dollar.) ANSWER:The EAA of the? Smoke-alator is $. (Round to the nearest?dollar.) ANSWER:Rib? & Wings-R-Us should purchase the Smoke-alator orstandard smoker. ANSWER: