You Are Evaluating Two Different Machines

question 12

Multiple Choice

You are evaluating two different machines. Machine A costs $10,000, has a five-year life, and has an annual OCF (after-tax) of −$2,500 per year. Machine B costs $15,000, has a seven-year life, and has an annual OCF (after-tax) of −$2,000 per year. If your discount rate is 14 percent, using EAC which machine would you choose?

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

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Definitions:

Altruism

The selfless concern for the well-being of others, often leading to voluntary actions intended to benefit others with no expectation of reward.

Entrepreneurship

The process of designing, launching, and running a new business or enterprise, often synonymous with taking financial risk for profit.

Achievement of Missions

The successful realization of organizational goals and objectives, particularly within the context of nonprofits and their dedication to specific causes or communities.

Fund-raising Campaigns

Organized efforts to collect money or resources, typically for nonprofit organizations, charitable causes, or community projects.