Firm is working alongside engineers

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Firm is working alongside engineers from Ford Motor Company comparing two SUV models to launch for next year’s market. The smaller SUV model will have an initial cost of $22,000, an operating cost of $1,000 per year, and a salvage value of $12,000 after 3 years. The larger SUV model will have initial cost of $26,000, an operating cost of $600 per year, and a salvage value of $15,000 after 3 years. At an interest rate of 15% per year, which model should they launch if they want to save as much money as possible on their investment.

Reference no: EM131165547

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