a) Option B, since it has a lower equivalent annual annuity

b) Option A, since it has a greater equivalent annual annuity

A janitorial services firm is considering two brands of industrial vacuum cleaners to equip their staff. Option A will cost $1500, will require servicing of $200 per year, and last five years. Option B will cost $1000, require servicing of $100, per year, and last 3 years. If the cost of capital is 8%, which is the better option, given that the firm has an ongoing requirement for cam cleaners?