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Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is 11.2%. The company plans to continue with one of the two models for the
foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Old Reliable -$200 -$4.1 -$4.1 -$4,1 -$4.1 -$4.1 -$4.1 -$4,1
Short and Sweet - $98 - $1.9 - $1.9 - $1.9 - $1.9 Based on the costs of each model, which should it choose? (Select the best choice below.) 0 A. Gateway Tours should choose Old Reliable because it lasts longer.
0 B. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller.
© C. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. 0 D. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.

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