Business
Business, 15.04.2021 23:00, niescarlosj

A firm is considering which of two devices to install to reduce costs in a particular situation. Both devices cost $50,000 and have useful lives of five-years with no salvage value. Device A can be expected to result in $600 savings annually. Device B will provide cost savings of $1,000 the first year, but will decline by $100 annually, making the second year's benefits $900, the third year $800, and so forth. Determine the equivalent uniform annual benefit for each device and state which the device the firm should use. Assume a 7% interest rate. (Hint - see slide 20 from the 3/25/21 lecture.)

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