A Currently Used Machine Costs $10,000 Annually to Run

question 112

Multiple Choice

A currently used machine costs $10,000 annually to run.What is the maximum that should be paid to replace the machine with one that will last 3 years and cost only $4,000 annually to run? The opportunity cost of capital is 12%.

• A) $2,000
• B) $9,607
• C) $14,411
• D)$24,018

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Definitions:

Desirable Jobs

Positions of employment that are highly sought after due to factors such as high pay, benefits, job security, and work-life balance.

Tournament Pay

A compensation structure where the rewards are distributed based on relative performance, rather than absolute metrics, often seen in competitive environments.

Marginal Revenue Product

The change in the total revenue of a firm that results from the employment of one additional unit of a resource. The marginal revenue product of an input is equal to its marginal product multiplied by the marginal revenue of the good or service produced.

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