Your manager has asked you to choose the best alternative among two cost saving devices. Both devices have a useful life of 10 years with no salvage value. Device A costs $10,000 and can be expected to result in $3,000 savings annually. Device B costs $10,500 and will provide cost savings of $4,000 the first year; however, savings will decrease by $100 annually.

a) For a MARR of 10%, calculate the annual worth of each device. What is AW(A)? AW(B)?

b) Which device should the firm choose? Why?