31) 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-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.