You Are Looking to Replace an Old Machine X with a New

question 91

Multiple Choice

You are looking to replace an old machine X with a new machine Y.
The two machines, X and Y, which perform the same functions, have the following costs and lives.
PV Costs Life
Machine X $10,000 5
Machine Y $11,500 7
Which machine would you choose? Assume an opportunity cost of capital of 15%.

• A)Keep the old machine X.
• B)Buy the new machine Y.
• C)Indifferent
• D)Neither

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Definitions:

Petty Cash

A small amount of cash on hand used for covering minor and incidental office expenses.