You Are Trying to Pick the Least-Expensive Machine for Your

question 60

Multiple Choice

You are trying to pick the least-expensive machine for your company. You have two choices: machine A, which will cost $100,000 to purchase and which will have OCF of −$7,000 annually throughout the machine's expected life of three years; and machine B, which will cost $125,000 to purchase and which will have OCF of −$2,600 annually throughout that machine's four-year life. Both machines will be worthless at the end of their life. If you intend to replace whichever type of machine you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 15 percent, using EAC which one should you choose?

• A) Machine A
• B) Machine B
• C) All of these choices are correct.
• D) Neither machine A nor B

---

Definitions:

Menopausal Symptoms

The physical and emotional signs and symptoms associated with the transition into menopause, including hot flashes, mood swings, and changes in libido.

Hypochondria

A mental disorder characterized by an excessive preoccupation or worry about having a serious illness, despite medical reassurance.

High Blood Pressure

A condition where the blood moves through the arteries at a higher pressure than what is considered normal, potentially leading to health issues.

Exercise

Physical exertion or activity done to maintain or improve health and fitness.