Answer:
The alternative that should be chosen assuming identical replacement is:
Alternative B.
Explanation:
a) Data and Calculations:
Alternatives:
                                                 A            B
First Cost                           $5,000     $9,200
Uniform Annual Benefit     $1,750      $1,850
Useful life, in years                4              8
Rate of return                       7%            7%
Annuity factor                   3.387          5.971
Present value of annuity $5,927.25 $11,046.35
Net cash flow                 $927.25     $1,846.35
b) Alternative B yields a higher return than Alternative A.  Since the two alternatives are based on the same rate of return, Alternative B will bring in a higher annual benefit, even when discounted to the present value.