Warehouse A with a life of 10 years can be constructed now for $100,000 with no repair costs and a salvage value of $10,000. Alternatively, 

Warehouse B with a life of 12 years can be constructed for $70,000 now with a salvage value of $5000, but requires $18,000 worth of repairs every 3 years. 

Both have equal usefulness and are needed indefinitely. 

Assuming the cost of money is 6%, which warehouse is a better deal and by most nearly how much per year?

Answer rating: 100% (QA)

SOLUTION To determine which warehouse is a better deal we need to calculate the present value of eac... View the full answer