A company is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 10 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $333,000, annual operating costs of $27,000, and a 6-year life. Machine B costs $285,000, has annual operating costs of $37,000, and a 5-year life. The firm currently pays no taxes. Which machine should be purchased and why?
Machine A; because it will save the company about $6,475 a year
Machine A; because it will save the company about $8,723 a year
Machine B; because it will save the company about $7,441 a year
Machine B; because it will save the company about $9,803 a year
Machine B; because it will save the company about $11,692 a year
A company is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 10 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $333,000, annual operating costs of $27,000, and a 6-year life. Machine B costs $285,000, has annual operating costs of $37,000, and a 5-year life. The firm currently pays no taxes. Which machine should be purchased and why?
Machine A; because it will save the company about $6,475 a year
Machine A; because it will save the company about $8,723 a year
Machine B; because it will save the company about $7,441 a year
Machine B; because it will save the company about $9,803 a year
Machine B; because it will save the company about $11,692 a year
.
Capitol Tech U Doctoral Presentation - April 2024.pptx
A company is analyzing two machines to determine which one it should p.docx
1. A company is analyzing two machines to determine which one it should purchase.
Whichever machine is purchased will be replaced at the end of its useful life. The
company requires a 10 percent rate of return and uses straight-line depreciation to a
zero book value over the life of the machine. Machine A has a cost of $333,000, annual
operating costs of $27,000, and a 6-year life. Machine B costs $285,000, has annual
operating costs of $37,000, and a 5-year life. The firm currently pays no taxes. Which
machine should be purchased and why?
Machine A; because it will save the company about $6,475 a year
Machine A; because it will save the company about $8,723 a year
Machine B; because it will save the company about $7,441 a year
Machine B; because it will save the company about $9,803 a year
Machine B; because it will save the company about $11,692 a year
A company is analyzing two machines to determine which one it should purchase. Whichever
machine is purchased will be replaced at the end of its useful life. The company requires a 10
percent rate of return and uses straight-line depreciation to a zero book value over the life of the
machine. Machine A has a cost of $333,000, annual operating costs of $27,000, and a 6-year life.
Machine B costs $285,000, has annual operating costs of $37,000, and a 5-year life. The firm
currently pays no taxes. Which machine should be purchased and why?
Machine A; because it will save the company about $6,475 a year
Machine A; because it will save the company about $8,723 a year
Machine B; because it will save the company about $7,441 a year
Machine B; because it will save the company about $9,803 a year
Machine B; because it will save the company about $11,692 a year
