The local fire department has determined the Sleep-Eazy Mattress Company is not in full compliance with local

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The local fire department has determined the Sleep-Eazy Mattress Company is not in full compliance with local fire regulations. To comply, Sleep-Eazy has two alternatives: It may install an automatic sprinkler system, or it may hire a fire safety expert to make weekly fire safety checks. The automatic sprinkler system will cost $\$ 125,000$, including installation charges, and will last for 10 years. It will have no salvage value. The entire system is virtually maintenance-free. The fire safety expert's fee is $\$ 14,000$ per year. The cost of capital is 10 percent. Which altemative should Sleep-Eazy Mattress Company choose? Why?

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Survey Of Accounting

ISBN: 9780538846172

1st Edition

Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen

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