Consider these two alternatives.

	Alternative 1		Alternative 2
First cost		$20,000	$16,000
Annual expense		$5000	$3000
Annual income		$11500	$11500
Salvage value		$4000	$0
economic life	8 years		4 years

The MARR is 8%

A. which alternative is favorable. show the workings.

B. By how much woul the salvage value for alternative 1 have to vary so that the initial decision would be reversed? Assume the salvage value of alternative 2 is still $0