Cannula Vending Corporation Is Expanding Operations and Needs to Purchase

question 109

Multiple Choice

Cannula Vending Corporation is expanding operations and needs to purchase additional vending machines. There are currently two companies, Viscera, Incorporated 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.) : Click here to view Exhibit 14B-1 and Exhibit 14B-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

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Definitions:

Body Parts

Structures that make up the anatomy of living organisms, including humans and animals.

Miller's Study

A significant psychological research conducted by George A. Miller in 1956, focusing on the limits of our capacity for processing information, notably finding that humans can hold about 7 (plus or minus 2) items in their working memory.

One-One Principle

A fundamental principle of counting that states each object being counted must be assigned one, and only one, number to represent it.

Gelman

A cognitive psychologist known for her work on the development of categorization and reasoning in children, especially in understanding numbers and biology.