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You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs

You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A costs $8,300 and is expected to run for 7 years; Model B is more expensive, with a price of $15,100, and has an expected life of 9 years. The annual maintenance costs are $860 for Model A and $720 for Model B. Assume that the opportunity cost of capital is 9 percent. Calculate equivalent annual costs (EAC) of each models. (Do not round the discount factor. Round intermediate calculations and final answers to 2 decimal places, e.g. 15.25.)

EAC of Model A is
EAC of Model B is

Which one should you buy, A or B?

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