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Maryott Resorts is planning to install one of two mechanical devices to reduce their beach cleaning expenses. Both cost $3000 and last five years with

Maryott Resorts is planning to install one of two mechanical devices to reduce their beach cleaning expenses. Both cost $3000 and last five years with no salvage value. Device A can be expected to result in $780 savings annually. Device B will provide cost savings of $680 the first year, but will increase by $80 annually, making the second year savings $760 and third year savings $840 and so forth.

a) With interest at 15% per year, calculate the PW of each device.

b) Which device should the firm purchase? Why?

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