Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 47

A salesman from Industrial Water Services (IWS), who is trying to get his foot in the door for a large account in Fremont, offered water chlorination equipment for $2.1 million. This is $400,000 more than the price offered by a competing saleswoman from AG Enterprises. However, IWS said the company would not have to pay for the equipment until the warranty runs out. If the equipment has a 2 year warranty, determine which offer is better. The company's real MARR is 12% per year, and the inflation rate is 4% per year.