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Jane is using a 10% annual interest rate to decide between three options: Model A, B or C. Model (A) Model (B) Model (C) Initial

Jane is using a 10% annual interest rate to decide between three options: Model A, B or C.

Model (A)

Model (B)

Model (C)

Initial Cost

$5,000

$2,000

$7,500

Life (years)

4

4

4

Annual Savings

$1,500

$650

$2,500

  1. Would the above decision change if the product life for all three models are 5 years instead of 4 years? Would the above decision change if PW analysis is applied instead of AW analysis?
    1. Yes, for both changes
    2. Yes on 5 years, but no on PW
    3. No on 5 years, but yes on PW analysis
    4. No for both change
    5. Cant answer this question as we need more information to compute AW and PW of the new scenarios

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