Jane is using a 10% annual interest rate to decide between three options: Model A, B or C.
Model (A) 
Model (B) 
Model (C) 

Initial Cost 
$5,000 
$2,000 
$7,500 
Life (years) 
4 
4 
4 
Annual Savings 
$1,500 
$650 
$2,500 
4 years:
PW:
Model A=5000+1500/(10%/(11/1.10^4))=245.2018
Model B=2000+650/(10%/(11/1.10^4))=60.4125
Model C=7500+2500/(10%/(11/1.10^4))=424.6636
AW:
Model A=5000*10%/(11/1.10^4)+1500=77.3540
Model B=2000*10%/(11/1.10^4)+650=19.0584
Model C=7500*10%/(11/1.10^4)+2500=133.9690
5 years:
PW:
Model A=5000+1500/(10%/(11/1.10^5))=686.1802
Model B=2000+650/(10%/(11/1.10^5))=464.0114
Model C=7500+2500/(10%/(11/1.10^5))=1976.9669
AW:
Model A=5000*10%/(11/1.10^5)+1500=181.0126
Model B=2000*10%/(11/1.10^5)+650=122.4050
Model C=7500*10%/(11/1.10^5)+2500=521.5189
Answer is Option D No for both change
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