Which investment provides ljb with the lowest total cost

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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

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

Problem b) Which investment provides LJB with the lowest total cost?

Reference no: EM132695845

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