You Are Considering the Purchase of One of Two Machines

question 17

Multiple Choice

You are considering the purchase of one of two machines used in your manufacturing plant. Machine A has a life of two years, costs $20,000 initially, and then $4,000 per year in maintenance costs. Machine B costs $25,000 initially, has a life of three years, and requires $3,500 in annual maintenance costs. Either machine must be replaced at the end of its life with an equivalent machine. Which is the better machine for the firm? The discount rate is 14 percent and the tax rate is zero.

• A)Machine A
• B)Machine B
• C)Both machines A and B
• D)Neither machine A nor B

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Definitions:

Buying Signal

An indication, either verbal or non-verbal, that a prospect is leaning towards making a purchase.

Sales Presentation

A detailed pitch or demonstration of a product or service designed to inform and persuade potential buyers.

Closing Question

A strategic question posed by a salesperson designed to lead the conversation towards the completion of a sale, aiming to secure a commitment from the prospect.

Product's Benefits

The advantages or positive outcomes that customers can expect from using a product, which can include solving problems or fulfilling needs.