A school must purchase new equipment for its chemistry lab….
A school must purchase new equipment for its chemistry lab. Two vendors submitted the following estimates. The school evaluates laboratory equipment purchases over a 4-year study period using a present worth analysis. The salvage values are not expected to change. Vendor A Vendor B First cost, $ 19,000 20,900 Annual maintenance & operating costs, $ per year 3,400 1,700 Salvage value 1,900 2,090 Life, years 5 8 The effective annual interest rate is 8%. What is the present worth of the cash flow for Vendor A that should be used in the analysis? [npwa] The net present worth of the cash flows for Vendor B is −$24,990. Based on a present worth analysis, which vendor should the school select? [select]
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