Your boss has told you to evaluate two ovens for Think the Thinkers, a gourmet sandwich shop. After some investigation, he determines that they have the following costs. He is told to assume that: a) The life of each machine is 5 years b) The company thinks it knows how to make 10% on investments no more risky than this one. At the end of the fourth year, the two different ovens can have a salvage value of $250 and $500, respectively.

Cost small oven: 1250 high quality oven: 2500

labor per year in excess of large models small oven: 750 high quality oven:0

maintenance Small:250 High quality:200

Salvage value small:250 high quality:500

Determine via present value method which machine to tell your boss to purchase.