Multiple choice Q:

Your boss asks you to evaluate the purchase of a new battery-operated toaster for his restaurant chain. The toaster [ BT ] costs $22 per unit, and has an estimated useful life of four years. The toaster requires batteries once a week yielding an annual operating cost of $96 per year; salvage value of both toaster and batteries is $12. The alternative is to purchase an electric toaster [ ET ] that will last seven years and costs $150. The estimated annual electric bill for this toaster is $60, and it has an expected salvage value of $15. The company anticipates purchase of 10000 toasters for eternity. Assume a tax rate of 38% and a WACC of 13%. If toaster BT's annual battery costs increase by $4 and ET's annual electric costs decrease by $4 which toaster would you recommend now?

answer from the following:

none of them

BT: AEC $59.6

BT: AEC $65.77

ET: AEC $65.77

ET: AEC $59.6