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A supply manager Is evaluating bids for a new delivery van.

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A supply manager Is evaluating bids for a new delivery van. Supplier J, which has provided similar equipment in the past, quotes a price of $50,000. Supplier K quotes a price of $52,500, but Includes an offer to buy back the van at the end of five years for $3,000. Both suppliers' bids meet specifications and delivery requirements. At a 10% opportunity cost of capital, and with the 5-year present value of $1 at $.62, which supplier should the supply manager choose, and why?

A.

Supplier K, as the firm will save $500

B.

Supplier J, as it provides the best value

C.

Supplier J, based on prior satisfactory performance

D.

Supplier K, to save money over the van's life cycle

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