What is the annualized cost of their choice

Reference no: EM132182291

Question - Springfield Ironworks (SI) recently had their furnace break down and they need to quickly purchase a new one to minimize the disruption in their production. They can either choose a high quality furnace (H) that costs $140,000 with $3,500 of annual maintenance costs for the 7-year life of the furnace, or a low quality furnace (L) that costs $70,000 with $9,500 in annual maintenance costs for the 4-year life of the furnace. Which furnace should SI choose? What is the annualized cost of their choice?

Reference no: EM132182291

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