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You are starting a vegan restaurant and need to buy a vehicle for delivery orders. You have two models in mind. Model A costs $10,000
You are starting a vegan restaurant and need to buy a vehicle for delivery orders. You have two models in mind. Model A costs $10,000 and is expected to run for 6 years; Model B is more expensive, with a price of $15,000 and an expected life of 10 years. The annual maintenance costs are $800 for Model A and $700 for Model B. Assume that the opportunity cost of capital is 10.6 percent.
Using the information provided in the question, which model would you choose based on the relevant analysis?
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