Hotel Europe is considering two mutually exclusive pieces of equipment for the laundry that perform the same task. The two alternatives available provide the following set of net cash flows:

Year Equipment A Equipment B

0 ($30 000) ($24 000)

1 $13 000 $6500

2 $13 000 $6500

3 $13 000 $6500

4 $ 5000 $6500

5 $ 4000 $6500

6 $6500

Equipment A has an expected life of five years. whereas equipment B has an expected life of six years. Working capital required is $2000 for A and $1500 for B. Repairs for both A and B is $2000 in year 4. Salvage value at the end of each project is estimated at $500 for A and $600 for B. Assume a required rate of return of 10%