A hotel is looking to replace its outdated alarm system to comply with safety standards. It...

A hotel is looking to replace its outdated alarm system to comply with safety standards. It has two options: System A costs $35,000 and lasts nine years. System B costs $22,000 and lasts six years. Maintenance throughout the year will cost $2,000 for System A and $3000 for System B, recognized at the end of each year. The hotel’s cost of capital is 10%. Which alarm system should the hotel choose? (Please Show work and explain answer)

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Calculate the equivalent annual cost as follows:

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jeff jeffy answered 1 year ago

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