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You are starting a new bakery and need to buy an oven. You have two models in mind. Model A costs $27,700 and is expected
You are starting a new bakery and need to buy an oven. You have two models in mind. Model A costs $27,700 and is expected to run for 8 years. Model B costs $29,500 and has an expected life of 10 years. The annual maintenance costs are $1,050 for Model A and $1,150 for Model B. Assume that the opportunity cost of capital is 12%, which one should you buy? Why?
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