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The local dry - cleaning store needs to replace their existing series of dry - cleaning machines which have become too costly to maintain. They

The local dry-cleaning store needs to replace their existing series of dry-cleaning machines which have become too costly to maintain. They are considering two different alternatives for the replacement decision. The first option is the EazyClean model, which will cost $25,000 today, has an annual operating cost of $2,500, and will last for 10 years. The second option is the Fibramatic Saver Series which costs $35,000 today, but uses activated clay filtration instead of distillation and therefore much less energy than conventional methods. This series will have annual operating costs of only $750 and will last for 17 years. The dry cleaning store must always have a set of machines in operation to service their customers. Assume that the appropriate discount rate is 10%, which option would you recommend to the owner??

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