Question
OM Construction Company must choose between two types of cranes. Crane A costs $600,000, will last for three years, and will require $60,000 in maintenance
OM Construction Company must choose between two types of cranes. Crane A costs $600,000, will last for three years, and will require $60,000 in maintenance each year. Crane B costs $1,000,000, will last for seven years, and will require $40,000 in maintenance each year. Maintenance costs for cranes A and B occur at the end of each year. The appropriate discount rate is 11 percent per year. Question: Which machine should OM Construction purchase? Group of answer choices
Purchase crane B because it has the highest NPV
Purchase crane A because it has the lowest EACNPV
Purchase crane B because it has the lowest EAC
Purchase crane A because it has the highest NPV
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