What is the economic savings for purchasing


Problem: You plan to suggest purchasing Squeeze-me-Harder 10 grape pressing machine. The retail price of this model is $10,000 plus $500 for lifetime maintenance and $1,500 per year (for five years) in operating expenses. However, the Squeeze-me-Harder 20 model retails for $12,000 and has the same lifetime maintenance fee. The latter model increases productivity by $500 annually and reduces operating expenses by $500 per year for five years. Assuming a five-year horizon, what is the economic savings for purchasing the Squeeze-me-Harder 20 model?

A. $1,500

B. $2,000

C. $3,000

D. $3,500

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