Cannula Vending Corporation Is Expanding Operations and Needs to Purchase

question 90

Multiple Choice

Cannula Vending Corporation is expanding operations and needs to purchase additional vending machines. There are currently two companies, Viscera, Inc. and Gullet International, that produce and sell machines that will do the job. Information related to the specifications of each company's machine are as follows (Ignore income taxes.) : Use Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.
Cannula's discount rate is 18%. Cannula uses the straight-line method of depreciation. Using net present value analysis, which company's machine should Cannula purchase and what is the approximate difference between the net present values of the competing company's machines?

• A) Gullet, $127
• B) Viscera, $1,562
• C) Viscera, $1,749
• D) Viscera, $3,438

---

Definitions:

Cognitive Appraisal

A mental process through which people evaluate the significance and meaning of events and situations for their well-being.

Richard Lazarus

A psychologist known for his research on stress and emotion, particularly for developing the appraisal theory of stress.

Robert Zajonc

A psychologist known for his theories on the interplay between emotions and cognitive processes.

Joseph LeDoux

An American neuroscientist known for his research on survival circuits, including mechanisms of fear and anxiety in the brain.