43.2
2. You are deciding between the following two pieces of equipment.
Their initial costs and subsequent benefits are shown in the
table. You will enter into a 12-year contract with the dealer for
one of the two pieces of equipment (thus, you will either
buy C3P0 four times or R2D2 twice over the next 12 years). If
your discount rate is 8%, which one should you pick? (8)
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | |
| C3P0 | -15 | 5 | 8 | 13 | |||
| R2D2 | -45 | 11 | 11 | 11 | 11 | 13 | 15 |
Take C3P0 (and he even speaks Baatchi) because he has the higher value on a per year basis.