An elevator company has redesigned their product to be 50% more energy efficient than hydraulic designs. Two designs are being considered for implementation in a new building.

Alternative A:

installed cost = 60000

annual cost = 2000

salvage value = 5000

useful life(in years) = 10

Alternative B:

installed cost = 90000

annual cost = 2500

salvage value = 6000

useful life(in years) = 20

Given an interest rate of 8% which bid should be accepted?