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Two competing companies have submitted bids to develop a new video display technology. The yearly development cost of Alpha expressed in actual dollars will be $150,000 the first year and increase by 5% per year over the five year contract. Beta has proposed a development cost, expressed in constant dollars, of $150,000 per year over the five year period. If the corporate MARR (investment at market rate) is 25% and the general price inflation is assumed to be 3.5% over the next five years, what is the NPW of Beta minus the NPW of Alpha?

a.$4,727

b.$7,672

c.$10,773

d.$8,554

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91943970

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