Suppose a new cost-saving device will generate $1,000 net savings per year to a firm.The device costs $10,000.Should the firm purchase the device?
A) definitely
B) absolutely not
C) The firm is indifferent between buying the device and not.
D) More information is required to answer.

Question

Quizplus · Accepted Answer

To determine whether the firm should purchase the device, information about the firm's cost of capital, the device's useful life, and other potential investments is needed. Without this, we cannot assess the return on investment or compare it to alternatives.

Suppose a New Cost-Saving Device Will Generate $1,000 Net Savings