You are a small business owner considering two alternatives for your phone system The discount rate is 8 Which alternative would you pick Plan A Plan B Initial cost (S) 50,000 120,000 Annual maintenance cost (S 9,000 6,000 10,000 20,000 20 years 40 years Salvage value (S) Life...

NPVA 50000 9000 PVA8 20 years 10000108 20 1362 ...

You are a small business owner considering two alternatives for your phone system. The discount rate is

Question:

You are a small business owner considering two alternatives for your phone system.

The discount rate is 8%. Which alternative would you pick?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...