A firm has two options regarding some pollution control equipment. Model A costs $80,000 to...

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Finance

A firm has two options regarding some pollution control equipment. Model A costs $80,000 to purchase an install, will last for 5 years and will cost $6,000 per year to operate. Model B costs $100,000 to purchase, will last for 6 years and will cost $4,000 per year to operate. Compare the two models according to their equivalent annual cost assuming the opportunity cost of capital to be 10% per year?

-Model A

-Model B

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