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

question 4

Multiple Choice

You can continue to use your less efficient machine at a cost of $8,000 annually.Alternatively,you can purchase a more efficient machine for $12,000 plus $5,000 annual maintenance.If the new machine lasts 5 years and the cost of capital is 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.

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Definitions:

Negative Linear Relationship

A relationship in which increases in the values of the first variable are accompanied by decreases in the values of the second variable.

Operational Definitions

Specific articulations of a concept or variable in terms of the procedures or techniques used to measure or manipulate it.

Construct Validity

The degree to which a test or instrument measures the theoretical construct or psychological concept it intends to measure.

Construct Validity

Construct validity refers to the degree to which a test measures what it claims, or purports, to be measuring.