The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor X's estimates are all in actual dollars, while Vendor Y's estimates are all in year-zero dollars.

Vendor X Initial Cost = $9300 Annual Cost = $4900 Service life = 10 yrs SV = $3720 Vendor Y Initial Cost = $11700 Annual Cost = $4000 Service life = 10 yrs

The manager uses an annual real interest rate of 8% for economic analysis. If inflation rate is expected to average 6.48% per year over the next five years, which vendor should the manager select that will minimize the cost of ownwership?

Calculate PW for each alternative (use negative sign for costs)