Consider the 2 cash flow options below at an interest rate of10%
| A | B |
| Initial Cost | 100,000 | 120,000 |
| Year Cost 1 | 1000 | 1500 |
| Year Cost 2 | 1400 | 1800 |
| Year Cost 3 | 1800 | 2100 |
| Year Cost 4 | 2200 | 2400 |
| Year Cost 5 | 2600 | 2700 |
| Year Cost 6 | 3000 | 3000 |
| Year Cost 7 | 3400 | 3300 |
| Year Cost 8 | 3800 | 3600 |
| Year Cost 9 | 4200 | 3900 |
| Year Cost 10 | 4600 | 4200 |
| Year Cost 11 | 5000 | 4500 |
| Year Cost 12 | 5400 | 4800 |
| Year Cost 13 | 5800 | 5100 |
| Year Cost 14 | 6200 | 5400 |
| Year Cost 15 | 6600 | 5700 |
Option A stops at 15 years, while option B goes until year 30.The final year of option B is equal to 10200.
Yearly savings for option A is 10000 and for option B is20000.
The salvage value for option A is 5000 and for option B is12000.
Which option is better?
