You Are Evaluating Two Different Machines

question 89

Multiple Choice

You are evaluating two different machines. Machine A costs $10,000, has a five-year life, and has an annual OCF (after tax) of -$2,500 per year. Machine B costs $15,000, has a seven-year life, and has an annual OCF (after tax) of -$2,000 per year. If your discount rate is 14 percent, using EAC which machine would you choose?

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

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Definitions:

H2 Visa

A type of visa allowing individuals to come to the United States temporarily for seasonal agricultural work.

Government Authority

An organization or body with the power to enforce laws, regulate behavior, and oversee activities within a specific area.

Subsidiary

A company that is completely or partly owned and wholly controlled by another company, known as the parent company.

Home-Country Nationals

Individuals who work for an organization or a subsidiary in their native country.