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You Are Trying to Pick the Least-Expensive Machine for Your

question 93

Multiple Choice

You are trying to pick the least-expensive machine for your company.You have two choices: machine A,which will cost $50,000 to purchase and which will have OCF of −$3,500 annually throughout the machine's expected life of three years; and machine B,which will cost $75,000 to purchase and which will have OCF of −$4,900 annually throughout that machine's four-year life.Both machines will be worthless at the end of their life.If you intend to replace whichever type of machine you choose with the same thing when its life runs out,again and again out into the foreseeable future,and if your business has a cost of capital of 14 percent,which one should you choose?

Definitions:

Human Resource Planning

The process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing tasks that will help the organization achieve its overall strategic objectives.

Strategic Human Resource Management

A proactive approach to managing a company's employees aimed at aligning HR strategies with business objectives to gain a competitive advantage.

Human Resource Supply Techniques

Refers to the strategies and methods used by organizations to meet their current and future human resource needs.

Structural Equation Modelling

A statistical technique that permits the testing of multiple relationships simultaneously in a theoretically derived model.