The basis of their capitalized costs

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Compare the alternatives shown below on the basis of their capitalized costs, using a nominal interest rate 12% per year, compounded quarterly.

Calculate the Capitalized Cost for each alternative and select the best option. Do not select until you have calculated the Capitalized Cost for each alternative.

Alternative A Alternative B

First Cost in $ -350,000 -700,000

Quarterly income, $/quarter +55,000 +40,000

Salvage value, $ +50,000 0.00

Life, in quarters 12 quarters ∞

Select Alternative A with CCA= +$661,300

Select Alternative B with CCB= +$1,333,333

Select Alternative A with CCA= +$778,733

Select Alternative B with CCB= +$633,333

Reference no: EM131462400

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