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A firm is considering three mutually exclusive alternatives as part of a production improvement program.The alternatives...

A firm is considering three mutually exclusive alternatives as part of a production improvement program.The alternatives are:

A   B C

Installed cost $10,000 $15,000 $ 20,000

Annual benefit 1625 1530 1890

  Useful life (Years) 10 20 20

The salvage value of each alternative is zero.At the end of 10 years Alternative A could be replaced with another A with identical cost and benefits .

a)Which alternative should be selected if interest is 6%

b)3%

c)If there is a difference between part a) and b) can you explain it ?

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