Transcribed Image Text
Gateway Tours is choosing between two bus models. One is moreexpensive to purchase and maintain but lasts much longer than theother.? Gateway's discount rate is 11.1 %. The company plans tocontinue with one of the two models for the foreseeable future.Based on the costs of each shown? below, which should it? choose? ?(Note: dollar amounts are in? thousands.) Model Year 0 Year 1 Year2 Year 3 Year 4 Year 5 Year 6 Year 7 Old Reliable negative $ 201negative $ 3.9 negative $ 3.9 negative $ 3.9 negative $ 3.9negative $ 3.9 negative $ 3.9 negative $ 3.9 Short and Sweetnegative $ 102 negative $ 1.8 negative $ 1.8 negative $ 1.8negative $ 1.8 Based on the costs of each? model, which should it?choose????(Select the best choice? below.) A. Gateway Tours shouldchoose Old Reliable because it lasts longer. B. Gateway Toursshould choose Short and Sweet because the equivalent annual annuityof its costs is smaller. C. Gateway Tours should choose Short andSweet because the NPV of its costs is smaller. D. Gateway Toursshould choose Old Reliable because the equivalent annual annuity ofits costs is smaller.