Projects with Different Lives: Your Firm Is Deciding Whether to Purchase

Multiple Choice

Projects with different lives: Your firm is deciding whether to purchase a high-quality printer for your office or one of lesser quality. The high-quality printer costs $40,000 and should last four years. The lesser quality printer costs $30,000 and should last three years. If the cost of capital for the firm is 13 percent, then what is the equivalent annual cost for the best choice for the firm? Round to the nearest dollar.

A) $10,000, either printer
B) $10,000, lesser quality printer
C) $12,706, lesser quality printer
D) $13,448, high-quality printer