A company purchases a piece of manufacturing equipment for rental purpose. The expected income is $10,000 the first year and increases $100 every year thereafter. Its useful life is 6 years. Expenses are estimated to be

$2,000 annually. The purchase price is $ 75,000 and there is a salvage value of $10,000. What is the equivalent annual worth (EAW) of this investment alternative with an interest rate of 10%

a. EAW = $51.54

b. EAW =

$2,911.66

C EAW =

$1,764.78

d. EAW = $-5,587 96