Precision Tool Is Analyzing Two Machines to Determine Which One

question 19

Multiple Choice

Precision Tool is analyzing two machines to determine which one it should purchase. The company requires a 15 percent rate of return and uses straight-line depreciation to a zero book value over the life of its equipment. Machine A has a cost of $892,000, annual operating costs of $26,300, and a 4-year life. Machine B costs $1,127,000, has annual operating costs of $19,500, and has a 5-year life. Whichever machine is purchased will be replaced at the end of its useful life. Precision Tool should purchase Machine _____ because it lowers the firm's annual cost by approximately _______ as compared to the other machine.

• A)A; $16,965.
• B)A; $17,404
• C)B; $16,965
• D)B; $17,404
• E)B; $17,521

---

Definitions:

Comedy Partner

A fellow actor, writer, or performer who collaboratively works with another in creating or performing humorous content.

Sunrise

The time in the morning when the sun appears above the horizon, marking the beginning of the day.

Genre Describes

A way of categorizing films, literature, or other forms of art based on distinctive styles, themes, or content.

British Comedian

A comedian originating from Britain, known for their unique style of humor, which may include satire, dry wit, and irony.