Ljb with the lowest total cost

Reference no: EM131015884

Problem: The LJB Company must replace a freezer and is trying to decide between the following two alternatives:

Item	Freezer A	Freezer B
Investment required	($29,000)	($25,000)
Annual electrical bill	(3,000)	(4,000)
Salvage value	6,000	5,000
Project life in years	11	11

The LJB Company's cost of capital is 8 percent.

Which investment provides LJB with the lowest total cost?

Reference no: EM131015884

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