You Can Continue to Use Your Less Efficient Machine at a Cost

question 35

Multiple Choice

You can continue to use your less efficient machine at a cost of $8,000 annually for the next five years.Alternatively, you can purchase a more efficient machine for $12,000 plus $5,000 annual maintenance.At a cost of capital of 15 percent, you should:

• A)buy the new machine and save $600 in equivalent annual costs
• B)buy the new machine and save $388 in equivalent annual costs
• C)keep the old machine and save $388 in equivalent annual costs
• D)keep the old machine and save $580 in equivalent annual costs

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Definitions:

Corporate Culture

The shared values, beliefs, attitudes, and practices that characterize an organization, influencing its people and the way they work.

Herb Kelleher

Co-founder of Southwest Airlines known for his innovative management style and emphasis on corporate culture and employee satisfaction.

Southwest Airlines

An American low-cost airline known for its unique customer service approach and extensive domestic network.

Social Networking

The use of internet-based platforms to connect with others, share information, and build relationships.