Bruno's,Inc

question 50

Multiple Choice

Bruno's,Inc. is analyzing two machines to determine which one it should purchase. The company requires a 14% rate of return and uses straight-line depreciation to a zero book value. Machine A has a cost of $290,000,annual operating costs of $8,000,and a 3-year life. Machine B costs $180,000,has annual operating costs of $12,000,and has a 2-year life. Whichever machine is purchased will be replaced at the end of its useful life. Which machine should Bruno's purchase and why? (Round your answer to whole dollars.)

• A) Machine A; because it will save the company about $8,600 a year
• B) Machine A; because it will save the company about $132,912 a year
• C) Machine B; because it will save the company about $200,000 a year
• D) Machine B; because it will save the company about $11,600 a year
• E) Machine B; because its equivalent annual cost is $199,759

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Definitions:

Marketing Expenditures

The total amount of money spent on activities aimed at promoting and selling a product or service.

Return on Marketing Investment

The profitability and efficiency of marketing efforts, measured by the revenue generated from marketing activities divided by the cost of those activities.

Mission Statement

A concise declaration of an organization's core purpose and focus that informs its strategies and decision-making.

Business Directive

A formal instruction or policy issued by a company's upper management outlining goals, strategies, or actions to be taken by the organization.