A large manufacturing firm can procure one equipment item from two suppliers -firm (A) and firm (B). Approximately 100,000 unites of the equipment are need. Estimates for vendors A and B are given for each unit.

Firm A Firm B Initial

Cost -18,000 -23,000

Annual Cost -13,500 -4,600

Annual income 15,000 6,000

Salvage value 2000 3,000

Life span 15 10

Use the rate of return method to determine which vendor should be selected.