A company must repair their main air conditioning system, and they are considering two alternatives.

(1) purchase a new compressor for 20,000 that will have a future salvage value of 2,000 at the end of its 15-year life; or

(2) purchase two high efficiency heat pumps for 28,000 that will have a future salvage value of 3,000 at the end of their 15-year useful life.

The new compressor will save the company 6,500 per year in electricity costs, and the heat pumps will save 8,500 per year. The companys discount rate is 12%.

Using the BCR method (Benefit/Cost Ratio), which alternative project should the company select? Is the answer the same if life cycle costs (LCC) are used to compare the projects?