Question
Camp Fortune wants to buy a new chairlift for their hill. After their market research, they have narrowed things down to two possible chairlifts they
Camp Fortune wants to buy a new chairlift for their hill. After their market research, they have narrowed things down to two possible chairlifts they are considering purchasing. Key information about these options are as follow. Chairlift A costs $695,000, last 7 years and provides an annual profit of $170,000. Chairlift B costs $1,215,000, last 15 years and provides an annual profit of $185,000. Assuming zero tax rate and a discount rate of 10%, which chairlift should Camp Fortune buy?
Question 41 options:
| Chairlift A because it has the highest EAA |
| Chairlift B because it has the highest EAA |
| The chairlift with the highest NPV |
| The chairlift with the lowest EAA |
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