A Company Is Considering Purchasing Two Different High-Speed Photocopiers

question 91

Multiple Choice

A company is considering purchasing two different high-speed photocopiers.The regular model costs $4,500 and the deluxe model costs $6,100.The company has projected cash savings of $800 for the first year, and then $850 annually thereafter for both models, but the vendor is claiming that the deluxe model is $400 cheaper per year to operate than the regular model.What are the payback periods for the Regular and Deluxe models respectively assuming that the vendor is correct?

• A)4.88 years; 5.63 years
• B)5.08 years; 5.29 years
• C)5.29 years; 4.88 years
• D)5.29 years; 5.63 years
• E)5.35 years; 4.92 years

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Definitions:

Withdrawals

The process of removing funds from an account, typically from a bank or investment account.

Retire

The act of leaving one's job and ceasing to work, typically due to reaching a certain age or for health reasons.

Beginning

Beginning, in financial terms, often refers to the starting point or initial value of an account, inventory, or financial statement at the onset of a period.

Nominal Annual Interest Rate

The percentage of interest charged on a loan without adjustment for the effect of compounding or inflation over a period of a year.