Find out which leave option must be selected on the basis

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Reference no: EM13395114

A project engineer with EnvironCare is assigned to start up a new office in a city where a 6-year contract has been finalized to take and to analyze ozone-level readings. Two lease options are available, each with a first cost, annual lease cost, and deposit-return estimates shown below.

	Location A	Location B
First cost, $	-15,000	-18,000
Annual lease cost, $ per year	-3,500	-3,100
Deposit return, $	1,000	2,000
Lease term, years	6	9

a) Determine which leave option should be selected on the basis of a present worth comparison, if the MARR is 15% per year.

b) EnviroCare has a standard practice of evaluating all projects over a 5-year period. If a study period of 5 years is used and the deposit returns are not expected to change, which location should be selected?

c) Which location should be selected over a 6-year study period if the deposit return at location B is estimated to be $6,000 after 6 years?

Reference no: EM13395114

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