Question

Two types of power converters are being considered for a specific application. You want to make...

Two types of power converters are being considered for a specific application. You want to make a comparison using a 15 percent interest rate and you have the following information:
Alternative
Alpha
Omega
Purchase price
$ 10,000
$ 20,000
Estimated useful life
5 years
9 years
Residual value
$ 1000
$ 5000
Annual cost of operation
$ 2,600
$ 1,300
to. Determine the annual equivalent cost of both alternatives. (10pts)
b. Using a useful life of 6 years, determine the present value of both alternatives if the residual value of alpha after one year of use is $ 8,000 and the residual value of Omega after 6 years of use is $ 8,500.
Business   Economics   
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Since it is not very clear in the question for Alpha that how many years replacement cycle is to be considered, I have considered two scenarios, one in which the replacement cycle is of 1 year only; and the other with six years replacement cycle using appropriate assumptions as mentioned above.

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