CARP, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with each alternative:
Data A |B
life(years) 10 |10
first cost $700,000 |$1,512,000
M&O $18,000 |$9,000
M&O gradient $900 |$775
Annual benefit $154,000 |$303,000
salvage value $142,000 |$210,000
Annual rare based on amount of products which can ordinarily be shipped each year as a function of the amount of vehicles or service purchased with the first cost and the M&O costs. Using a MARR of 15%, calculate the equivalent uniform annual cash flow (EUAB-EUAC) for each alternative; determine the most desirable alternative based on the results.