The Equipment Below Is Required for Your Business

question 64

Multiple Choice

The equipment below is required for your business. Assume each will be replaced as it wears out. The required return is 15%. Ignore taxes. Which machine should you buy and why?

• A) Machine A because it has a higher NPV.
• B) Machine A because it effectively costs less to operate each year.
• C) Machine B because it has a higher NPV.
• D) Machine B because it effectively costs less to operate each year.
• E) Neither, since the NPV for both is negative.

---

Definitions:

General Taxpayers

Refers to individuals and entities that are subject to tax by government policies, encompassing a wide range of income levels and types.

Bundling Projects

The practice of combining several products or projects into a single package deal, often used to sell products or services that may be less desirable individually.

Local Districts

Geographic or administrative divisions within a larger region or country, often used for local governance or electoral purposes.

Pork-barrel Legislation

Government spending for localized projects secured primarily to bring money to a representative's district.