Two mutually exclusive alternatives are being considered

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Reference no: EM131186403

Two mutually exclusive alternatives are being considered for pollution control equipment. The economic data is given below:

A B

Initial cost $20,000 $38,000

Annual expenses $5,500 $5,000

Useful life 5 years 9 years

Salvage value at the end $1,000 $3,000

Of useful life

The study period is 9 years. If alternative A is selected, a portable system would be leased for the last 4 years at a cost of $10,000 per year including all expenses. If the MARR is 15% per year, which alternative should be selected?

Reference no: EM131186403

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