A garage is comparing the cost of buying two different car hoists. Hoist A will cost $20,000, will
require servicing of $1000 every two years, and last ten years. Hoist B will cost $15,000, require
servicing of $800 per year, and last eight years. If the cost of capital is 7%, which is the better
option, given that the firm has an ongoing requirement for a hoist?
A) Hoist A, since it has a greater equivalent annual annuity.
B) Hoist A, since it has a greater present value (PV).
C) Hoist B, since it has a greater present value (PV).
D) Hoist B, since it has a greater equivalent annual annuity.
Answers: 1
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A garage is comparing the cost of buying two different car hoists. Hoist A will cost $20,000, will
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