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

question 69

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 $12,000 + $5,000

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Definitions:

Structure

The arrangement of atoms within a molecule which dictates its physical and chemical properties.

Sequence of Reagents

The ordered list of chemical substances (reagents) used in a multi-step chemical synthesis, detailing the progression of reactions.

Transformation

A thorough or dramatic change in form or appearance, often referring to the alteration of a substance's structure in chemical reactions.

M-cresol

An organic compound, a type of methylphenol, where the methyl group is positioned meta to the hydroxyl group on a benzene ring.