Which model should the consulting firm buy? A consulting engineering firm is considering two models of SUVs for the company principals.
A GM model will have a first cost of $26,000, an operating cost of $2000, and a salvage value of $12,000 after 3 years.
A Ford model will have a first cost of $29,000, an operating cost of $1200, and a $15,000 resale value after 3 years. At an interest rate of 15% per year, which model should the consulting firm buy? Conduct an annual worth analysis.