DeCento's Is Analyzing Two Mutually Exclusive Machines to Determine Which

question 72

Multiple Choice

DeCento's is analyzing two mutually exclusive machines to determine which one it should purchase.Whichever machine is purchased,it will be replaced at the end of its useful life.The company requires a return of 15 percent and uses straight-line depreciation to a zero book value over the life of the machine.Machine A has a cost of $386,000,annual operating costs of $29,000,and life of 4 years.Machine B costs $257,000,has annual operating costs of $19,000,and a life of 3 years.The firm currently pays no taxes.Which machine should be purchased and why?

• A)Machine A because it will save the company about $32,642 a year
• B)Machine A because it will save the company about $19,261 a year
• C)Machine B because it will save the company about $32,642 a year
• D)Machine B because it will save the company about $10,000 a year
• E)Machine B because it will save the company about $19,261 a year

---

Definitions:

Bit Status

The current state (on or off) of a bit, representing the smallest unit of data in digital computing and communications.

Logic Continuity

Logic Continuity refers to the uninterrupted and consistent application of logical conditions and operations in a control or computational process.

OFF Condition

A state in which a circuit, device, or system is not activated or is in a power-down mode.

Instruction B

Specific directive or operation code within a computer program or system.