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