Use Annual Cost Analysis to determine whether Alternative A or B should be chosen. The analysis period is 5 years. Assume an interest rate of 6% per year, compounded annually.

Alternative A Alternative B
Initial Cost 2800 6830
Annual Benefit 500 1120
Salvage Value 360 895
Useful Life (yrs) 5 5

a. Alternative A should be chosen, because its initial cost is lower than Alternative B's
b. Alternative B should be chosen, because its annual benefit is higher than Alternative A's
c. Alternative A should be chosen, because its equivalent annual cost is $241.81 lower than Alternative B's
d. Alternative B should be chosen, because its equivalent annual cost is $241.81 higher than Alternative A's