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

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Definitions:

Identity Statuses

The various configurations of identity development in adolescents and adults as theorized by psychologists, including stages of exploration and commitment.

Comfortable

A state of physical or psychological ease, often free from pain or constraint.

Vocational Identity

A sense of personal suitability to a particular profession or occupational category, often developed during adolescence.

Identity Foreclosure

A stage in identity development where an individual commits to an identity without exploring options, often based on the expectations of others rather than personal choice.