Your Firm Is Evaluating the Merits of Several Different Machines

question 79

Multiple Choice

Your firm is evaluating the merits of several different machines. Machine A has a useful life of 5-years, generates an NPV of $53,250, an IRR of 13.6% and an equivalent annual cost of $10,316. Machine B has a useful life of 3-years, an NPV of $61,051, an IRR of 12.5%, and an equivalent annual cost of $9,724. Machine C has a useful life of 4-years, generates an NPV of $55,225, an IRR of 15.2% and an equivalent annual cost of $7,535 Machine D has a useful life of 7-years, generates an NPV of $64,020, an IRR of 11.4% and an equivalent annual cost of $8,885. Which machine should be purchased and why?

• A) Machine C, because it has the highest IRR.
• B) Machine D, because it has the highest NPV.
• C) Machine A, because it has the most positive EAC
• D) Machine B, because it has the shortest useful life.

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Definitions:

Artifact

In a medical context, an artifact refers to any distortion or error in images (e.g., X-rays, MRIs) not caused by the actual structures of the body being imaged.

Peak Flow Zone

A term used in respiratory care to denote ranges of peak expiratory flow rates indicative of the severity or control of asthma.

Pulse Oximetry

A non-invasive method used to measure the oxygen saturation level of the blood.

Sensor

A device that detects or measures physical properties and records, indicates, or otherwise responds to it.