You are working on a project and taking quotes for the installation of a new sprinkler system. Each company is providing an initial instillation cost and maintenance cost for the life of the system. Three quotes have been provided to you. Compare the capitalized costs for each option and choose the most desirable option. Assume the interest rate is 6%. Option A Option B Option C Initial Cost 650,000 500,000 600,000 Maintenance Cost 3,000 5,000 4,500 Option A Option B Option C Both Option A and Option C as the capital costs of them are the same.
You are working on a project and taking quotes for the installation of a new sprinkler system. Each company is providing an initial instillation cost and maintenance cost for the life of the system. Three quotes have been provided to you. Compare the capitalized costs for each option and choose the most desirable option. Assume the interest rate is 6%. Option A Option B Option C Initial Cost 650,000 500,000 600,000 Maintenance Cost 3,000 5,000 4,500 Option A Option B Option C Both Option A and Option C as the capital costs of them are the same.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are working on a project and taking quotes for the installation of a new sprinkler system. Each company is providing an initial instillation cost and maintenance cost for the life of the system. Three quotes have been provided to you. Compare the capitalized costs for each option and choose the most desirable option. Assume the interest rate is 6%.
|
Option A |
Option B |
Option C |
Initial Cost |
650,000 |
500,000 |
600,000 |
Maintenance Cost |
3,000 |
5,000 |
4,500 |
Option A |
||
Option B |
||
Option C |
||
Both Option A and Option C as the capital costs of them are the same. |
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