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You must choose one of two types of equipment for your company. Option #1 Option #2 Initial costs $130000 Initial costs $350000 Annual benefit

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You must choose one of two types of equipment for your company. Option #1 Option #2 Initial costs $130000 Initial costs $350000 Annual benefit of $50000 Annual benefit of $87000 Salvage value of $20000 Salvage value of $50000 Useful life of 5 years Useful life of 3 years Assuming a 8% interest rate, a) what is the BCR of option #1? (2 points) b) what is the BCR of option #2? (2 points) c) what is the delta BCR? (3 points) d) which option would you choose if you have sufficient capital to invest? (2 points)

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