ANSWER :
Time = 7 years
R = 8%
For Willard Inc. alternative,
Present value of the cost = 3600 + 3600/1.08 + 3600/1.08^2 + 3600/1.08^3
Present value of the cost = 12877.55
For Putiyon Inc. alternative,
Present value of the cost = present value of the investment
Present value of the cost = $12250
Since, the Putiyon Inc. alternative is relatively cost effective between the two alternatives. So, alternative of Putiyon Inc. should be selected.
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