Question: As part of a hotel renovation program a company must
As part of a hotel renovation program, a company must choose between two grades of carpet to install. One grade costs $22 per square yard, and the other, $28. The costs of cleaning and maintaining the carpets are identical, but the less expensive carpet must be replaced after six years, whereas the more expensive one will last nine years before it must be replaced. The relevant discount rate is 13 %. Which grade should the company choose?
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