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

question 2

Multiple Choice

You can continue to use your less efficient machine at a cost of $8,000 annually for the next 5 years. Alternatively, you can purchase a more efficient machine for $12,000 plus $5,000 annual maintenance. At a cost of capital of 15%, 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.

---

Definitions:

Begging the Question

A logical fallacy in which the conclusion of an argument is assumed in the premise, essentially arguing in a circle.

Truth

The quality or state of being in accord with fact or reality.

Appeal to Ignorance

A fallacy in which a conclusion is based on the absence of evidence rather than the presence of evidence.

Focus Group

A targeted group of people brought together to discuss and provide feedback on a particular subject or product.