You Are Considering the Purchase of One of Two Machines

question 31

Multiple Choice

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $20,000 initially, and then $4,000 per year in maintenance costs. Machine B costs $25,000 initially, has a life of three years, and requires $3500 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The discount rate is 14% and the tax rate is zero.

• A) Machine A
• B) Machine B
• C) Both Machines A and B
• D) Neither Machine A nor B

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Definitions:

Dendrite

Branch-like extensions of a neuron that receive signals from other neurons.

Neural Message

The process by which nerve cells (neurons) communicate information through electrical and chemical signals.

Resting Potential

The state of a neuron when it is not being stimulated or activated, characterized by a negative charge inside the cell relative to the outside.

Action Potential

A temporary reversal in the electrical polarization of the membrane of a nerve cell, allowing for the transmission of nerve impulses.