Homework Answers
| Present value of first company = Installation cost + ( Yearly charges / Discount rate)= | |||||||
| 0 + ( 426 / 6% )= $7100 | |||||||
| Present value of second company = Installation cost + ( Yearly charges / Discount rate)= | |||||||
|
751 + (242/6%) = 751 + 4033.33 = $4784.33 |
|||||||
Second company should be sellected as lower present value of cost.
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