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Use Annual Cost Analysis to determine whether Alternative A or B should be chosen. The analysis period is 5 years. Assume an interest rate of
Use Annual Cost Analysis to determine whether Alternative A or B should be chosen. The analysis period is 5 years. Assume an interest rate of 6% per year, compounded annually Alternative A Alternative B Initial Cost 2100 4610 Annual Benefit 300 640 Salvage Value 60 170 Useful Life (yrs) 5 5 Alternative A should be chosen, because its equivalent annual cost is $236.36 lower than Alternative B's Alternative B should be chosen, because its annual benefit is higher than Alternative A's Alternative A should be chosen, because its initial cost is lower than Alternative B's Alternative B should be chosen, because its equivalent annual cost is $236.36 higher than Alternative A's
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