choosing mandatory projects on the basis of least cost kim inc must install a new ai 1549693

CHOOSING MANDATORY PROJECTS ON THE BASIS OF LEAST COST Kim Inc. must install a new air conditioning unit in its main plant. Kim must install one or the other of the units; otherwise, the highly profitable plant would have to shut down. Two units are available, HCC and LCC (for high and low capital costs, respectively). HCC has a high capital cost but relatively low operating costs, while LCC has a low capital cost but higher operating costs

because it uses more electricity. The costs of the units are shown here. Kim’s WACC is 7%.