Cristiano Orlando, president of Better Juice Ltd, is considering the purchase of a machine that will improve the operations of the company. Two machines are available. The CRJ2000 costs $70,000 and will last for 7 years. It will produce positive incremental cash flows of $20,000 per year. The GS180 costs $90,000 and will last for 9 years. It will produce incremental cash flows of $22,000 per year. What is the equivalent annual annuity (EAA) of the machine? Assume a discount rate of 6%.

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The equivalent annual annuity EAA is a financial metric used to compare investment projects with dif... View the full answer