What are the npvs of the respective models

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Reference no: EM133392241

Question: You are starting a pancake business,pancakes 2U ltd, and need to buy a vehicle for delivery orders. You have two models in mind .Model A costs $10,000 and is expected to run for 6 Years : Model B is more expensive,with a price of $15,000 and an expected life of 10 years. The annual maintenance costs are $800 for model A and $700 for model B . Assume that the opportunity costs of capital is 10.60 percent per annum.

a) What are the NPVs of the respective model's?

b) What are the equivalent annum costs (EACs) of the respective models?

c) Which model would you choose and why?

Reference no: EM133392241

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