As a manager, you need to make a purchasing decision between two different kitchen equipment. Model 1 is the purchase of a new kitchen equipment for $550,000. Its estimated useful lifetime is 6 years and it would require yearly maintenance payments of $1,200 throughout its lifetime. The maintenance payments are due at the end of each year. Model 2 also has an estimated useful lifetime of 6 years. It would require an initial down payment of $300,000 and then monthly payments of $3,500 due at the end of each month. These payments include a small monthly maintenance fee. Your nonprofit uses a discount rate of 3.5%.

1) Soley based on financial information, make your decision

2) What is the total Net Present Cost of using the model A for 6 years? and what is the total Net Present Cost of using the model B for 6 years?