The manager of engineering at the 900-megawatt Hamilton Nuclear Power Plant has three options to supply personal safety equipment to employees.

Two are vendors who sell the items, and the third alternative is to rent the equipment for $50,000 per year, but for no more than 3 years per contract.

These items have relatively short lives due to constant use. The MARR is 10% per year.

Vendor R Vendor T Rental Initial cost, $ 75,000 125,000 0 Annual upkeep, $ per year 27,000 12,000 0 Annual rental, $ per year 0 0 50,000 Salvage value, $ 0 30,000 0 Estimated life, years 2 3 Maximum of 3

a. Select from the two vendors using the LCM and PW analysis.

b. Determine which of the three options is cheaper over a study period of 3 years.