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The LJB Company must replace a freezer and is trying to decide between the following two alternatives: Item Freezer A Freezer B Investment required ($29,000)

The LJB Company must replace a freezer and is trying to decide between the following two alternatives:

Item

Freezer A

Freezer B

Investment required

($29,000)

($25,000)

Annual electrical bill

(3,000)

(4,000)

Salvage value

6,000

5,000

Project life in years

11

11

The LJB Companys cost of capital is 8 percent.

Which investment provides LJB with the lowest total cost?

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