Two pieces of equipment are being considered for an identical service. The installed costs and yearly operating costs associated with each piece of equipment are as follows:

If the internal hurdle rate for comparison of alternatives is set at 15% p.a., which piece of equipment do you recommend be purchased?

Above what internal hurdle rate would you recommend Project A?

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Costs A B Installed Cost $5000 $10,000 Operating Cost Equipment Life5 y $2000/y$1000/y 7y