Answer to Question #81182 in Finance for yash

Question

Big Blue Granite (BBG) needs to purchase a new saw for creating their top quality countertops. Saw A costs $345,000 with $6,500 of annual maintenance costs for the first year that will increase by 7.0% each year for the 7-year life of the saw. Saw B costs $210,000 with $15,000 of annual maintenance costs for the first year that will increase by 12.0% each year for the 4-year life of the saw. Which saw should BBG choose? What is the annualized cost of this choice? Assume a discount rate of 9.5%, and ignore all taxes.