A manufacturing company is evaluating two options for new equipment to introduce a new product to its suite of goods. The details for each option are provided below: Option 1

$65,000 for equipment with useful life of 7 years and no salvage value.
Maintenance costs are expected to be $2,700 per year and increase by 3% in Year 6 and remain at that rate.
Materials in Year 1 are estimated to be $15,000 but remain constant at $10,000 per year for the remaining years.
Labor is estimated to start at $70,000 in Year 1, increasing by 3% each year after.
Revenues are estimated to be:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
- 75,000 100,000 125,000 150,000 150,000 150,000
Option 2

$85,000 for equipment with useful life of 7 years and a $13,000 salvage value
Maintenance costs are expected to be $3,500 per year and increase by 3% in Year 6 and remain at that rate.
Materials in Year 1 are estimated to be $20,000 but remain constant at $15,000 per year for the remaining years.
Labor is estimated to start at $60,000 in Year 1, increasing by 3% each year after.
Revenues are estimated to be:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
- 80,000 95,000 130,000 140,000 150,000 160,000
The company’s required rate of return is 8%.

Management has turned to its finance and accounting department to perform analyses and make a recommendation on which option to choose. They have requested that the four main capital budgeting calculations be done: NPV, IRR, Payback Period, and ARR for each option.

For this assignment, compute all required amounts and explain how the computations were performed. Evaluate the results for each option and explain what the results mean. Based on your analysis, recommend which option the company should pursue.

idk the answer so dont listen too me

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.