You are considering the purchase of new equipment for your company and you have narrowed

down the possibilities to two models which perform equally well. However, the method of paying for

the two models is different. Model A requires $$5,000$ per year payment for the next five years. Model

B requires the following payment schedule. Which model should you buy if your opportunity cost is

$8$ percent? $($Answer:Model A $$19,965,$ Model B:$$20,577,$ Choose A$)$

Year Payment $($Model B$)$

$1$ $$7,000$

$26,000$

$35,000$

$44,000$

$53,000$