Rollerblade, a Maker of Skating Gear, Is Evaluating Two Alternative

question 3

Multiple Choice

Rollerblade, a maker of skating gear, is evaluating two alternative presses.Press A costs $88,000, has a 4 year life, and is expected to generate annual cash inflows of $30,100 in each of the 4 years.Press B costs $122,000, has an 8 year life, and is expected to generate annual cash inflows of $24,600 in each of 8 years.The cost of replacement for A is $96,000 and the replacement press will generate cash inflows of $30,100 for another 4 years.Rollerblade uses a 12% cost of capital.Which press should be chosen?

• A)A
• B)B
• C)both A and B
• D)neither A or B

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Definitions:

Marketing Strategies

Comprehensive plans created to reach marketing goals, including target market selection and the development of a marketing mix.

Single Year

A term referring to events or achievements that occur or are completed within one calendar year.

Budget Projections

Financial estimates predicting future income, expenditures, and financial needs of an organization or project.

Long-Range Marketing Plans

Strategic frameworks that outline marketing goals and initiatives over an extended period, typically spanning several years, to achieve long-term business objectives.