Examlex

Solved

Machine 1 Is Being Challenged by Machine 2,which Has Greater

question 75

Essay

Machine 1 is being challenged by Machine 2,which has greater capacity,lower variable costs,and higher fixed costs,but Machine 2 requires a much larger investment.Should the organization buy Machine 1 or Machine 2? The sales department states that demand is larger than supply and that,if they matched demand,they could deliver 6,000 units per quarter.The organization uses a 3-month time period (T = 3) for its breakeven analysis.It could also be T = 1 quarter. Machine 1 is being challenged by Machine 2,which has greater capacity,lower variable costs,and higher fixed costs,but Machine 2 requires a much larger investment.Should the organization buy Machine 1 or Machine 2? The sales department states that demand is larger than supply and that,if they matched demand,they could deliver 6,000 units per quarter.The organization uses a 3-month time period (T = 3) for its breakeven analysis.It could also be T = 1 quarter.


Definitions:

Par Value

The face value of a bond or stock, representing the amount to be returned to the holder at maturity.

Annual Coupon

The yearly interest payment paid to bondholders, typically expressed as a percentage of the bond's face value.

Maturity

Maturity is the date on which the principal amount of a loan, bond, or other financial instrument is due to be paid in full.

Yield To Maturity

An estimate of the annualized rate of return of a bond if held until the date it matures, accounting for its current market price, face value, interest payments, and time to maturity.

Related Questions