There are 2 choices for a new piece of equipment for your municipality: Option A will cost $60,000 and last 20 years, at which time it will have a salvage value of $5,000. Each year the equipment will result in a net benefit of $8,000 to the municipality (net benefit = cost savings - operating cost). Option B will cost $65,000 and last 17 years, at which time it will have a salvage value of $6,500. Each year the equipment will result in a net benefit of $9,200 to the municipality. MARR =10% compounded annually a) Determine which option would be the better choice if the municipality will base their decision on lowest Equivalent Annual Cost (EAC). b) If it is decided that the equipment will only be required for 15 years, what would the EAC of each option be and would your decision change? Assume that each year over the lifespan of each option that the salvage value decreases by an equal amount. So for example with Option A at Year 0 , the Salvage Value = Principle Amount =$60,000. Option A has a lifespan of 20 -years and the Salvage Value at that time will be $5,000. So Salvage Value decreases linearly between these two values and you can calculate the Salvage Value for Year 15. This is a Straight-Line method for determining Depreciation