Question

A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer...

A butcher is considering two freezers for his steaks: Kool Freezer and Chill Deluxe. Kool Freezer costs $100,000 upfront and has maintenance costs of $10,000 each year for the next 8 years. Chill Deluxe costs $30,000 upfront and has maintenance costs of $20,000 each year for the next 4 years. If the discount rate is 4%, which freezer should be selected and what is its equivalent annual cost?

Kool Freezer; $28.26K

Kool Freezer; $24.85K

Kool Freezer; $26.74K

Chill Deluxe; $28.26K

Chill Deluxe; $24.85K

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