Econ

Econ

A company purchases a piece of manufacturing equipment for rental purposes. The expected income is 10,000, the first year and increases 100 every year thereafter. Its useful life is 6 years. Expenses are estimated to be 2,000 annually. The purchase price is 75,000 and there is a salvage value of 10,000. What is the equivalent annual worth of this investment alternative with an interest rate of 6%?

a. EAW = 2,911.66
b. EAW = 1,764.78
c. EAW = -5,587.96
d. 235.22