A company is considering two mutually exclusive equipment alternatives to increa

Question

A company is considering two mutually exclusive equipment alternatives to increase its production volume. The respective financial estimates for each alternative are as follows.

Equipment A

Equipment B

Initial Cost

$60K

$84.85K

EUAB

$21K

$24K

Salvage Value

$9K

$0

If the useful life of equipment A is 4 years, with a MARR of 15%, the useful life in years of equipment B that makes both the equipment equally desirable is nearly equal to ___ years.

5

7

6

4

Equipment A

Equipment B

Initial Cost

$60K

$84.85K

EUAB

$21K

$24K

Salvage Value

$9K

$0

Explanation / Answer

6

6

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