A janitorial services firm is considering two brands of industrial vacuum cleaners to equip their staff. Option A will cost $1500, will require servicing of $200 per year, and last five years. Option B will cost $1000, require servicing of $100 per year, and last three years. If the cost of capital is 8%, which is the better option, given that the firm has an ongoing requirement for vacuum cleaners? Why?

Answer rating: 100% (QA)

To determine which option is better we need to compare the total costs of each option over the relev... View the full answer