You are given two options in the table below:

Options

Red

Blue

Purchase Price

$1200

$3,000

Annual Benefit

$320

$700

Life (years)

15

8

The analysis period is 15 years, but there will be no replacement for Alternative Blue after 8 years.

Based on a 6.25% interest rate and an annual cash flow analysis, state below the equivalent uniform annual worth (to closest penny) of each option.

Also state below which option should be selected and why.