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Machine a Has a Purchase Price of $500 and Lasts

Question 13

Multiple Choice

Machine A has a purchase price of $500 and lasts for 10 years at which time it has a salvage value of $50.It produces 500 units per year.Machine B costs $500 and has a scrap value of $100 after 15 years.How many units per year should Machine B produce if a buyer is to be indifferent between the 2 machines if j1 = 4%? Assume zero maintenance costs and answer to the nearest unit.


A) 464
B) 370
C) 358
D) 348

Correct Answer:

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