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:

Net Income

The total earnings of a company after deducting all expenses, including taxes and costs, from its total revenues, indicating its profitability.

Generally Accepted Accounting Principles

A set of standards, principles, and procedures that guide the accounting practices and financial reporting in the U.S.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.

Balance Sheet

A document detailing a business's financial status at a given moment, listing the company's resources, debts, and owner's equity.