Question
equal to HANDS ON Now that you have reviewed the concepts introduced in this chapter, it is time for some hands-on practice with the
equal to HANDS ON Now that you have reviewed the concepts introduced in this chapter, it is time for some hands-on practice with the analytical tools that have been introduced. Work through each problem in this section carefully, and then check your results against those given at the end of the chapter. GFM Corp. is considering the purchase of a stamping machine to make certain small metal parts it has previously bought from a subcontractor at a cost of $40,000 per year. Two firms submit bids to supply the machine. Supplier A offers its machine for $100,000. The machine will cost $15,000 per year to operate and will last 5 years. At the end of the fifth year it will have a salvage value of $5,000. Supplier B offers its machine for $95,000. This machine will also last 5 years and have a salvage value of $5,000, but it will cost $20,000 per year to operate. In an effort to offset the disadvantage of higher operating costs, Supplier B offers to pay the entire $20,000 operating cost during the first year. Which machine is a better buy if the two proposals are
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