A Janitorial Services Firm Is Considering Two Brands of Industrial

question 135

Multiple Choice

A janitorial services firm is considering two brands of industrial vacuum cleaner to equip their staff.Option A will cost $1500,will require servicing of $200 per year,and last five years.Option B will cost $1000,require servicing of $100 per year,and last three years.If the cost of capital is 8%,which is the better option,given that the firm has an ongoing requirement for vacuum cleaners?

• A)Option A,since it has a lower equivalent annual annuity.
• B)Option B,since it has a lower equivalent annual annuity.
• C)Option A,since it has a greater equivalent annual annuity.
• D)Option B,since it has a greater equivalent annual annuity.
• E)Both options have the same equivalent annual annuity.

---

Definitions:

Publicity Potential

The capacity or likelihood of a product, event, or person to attract media attention or public interest.

Recognizability

The quality or state of being easily identifiable or recognizable based on specific characteristics.

Simon Cowell

A British music and television executive known for his critical commentary as a judge on talent shows like "American Idol," "The X Factor," and "Britain's Got Talent."

Lady Gaga

An American singer, songwriter, and actress known for her image reinventions and musical versatility.