A janitorial services firm is considering two brands of industrial vacuum cleaners to equip their staff. Option A will cost $1,500,require servicing of $200 per year, and it will last five years. Option B will cost $1,000, require servicing of $100 per year, and it willlast three years. If the cost of capital is 8%, which is the better option, given that the firm has an ongoing requirement for vacuumcleaners?O Option A, since it has a greater equivalent annual cost.O Option B, since it has a greater equivalent annual cost.O Option B, since it has a lower equivalent annual cost.O Option A, since it has a lower equivalent annual cost.

Equivalent Annual Cost (EAC) is a method used to evaluate and compare the annual cost of different…

Answered: A janitorial services firm is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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