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  3. 3. a company receives three tender submissions on

3. A company receives three tender submissions on a multi-year maintenance contract; the details are...

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Accounting

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3. A company receives three tender submissions on a multi-year maintenance contract; the details are as follows: - For Submission A, an immediate cost of $50,000 is required at inception of the work. The annual cost for each of the next 7 years is $10,000. - For Submission B, an immediate cost of $30,000 is required at inception of the work. Further costs are incurred at the end of the 2 nd, 4 th and 7 th years, each with an amount of $25,000. - For Submission C, an immediate cost of $10,000 is required at inception of the work. Further costs are incurred at the end of each year for the next 6 years. The cost is $18,000 at the end of the first year, and grows at 5% per year. Costs are to be discounted using an interest rate of 12% per year. Rank the equivalent annual costs (EAC) of the three submissions, from the largest one to the smallest one. Which submission should be chosen based on the EAC criterion

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