{"id":33938,"date":"2025-06-23T12:16:10","date_gmt":"2025-06-23T12:16:10","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=33938"},"modified":"2025-06-23T12:16:11","modified_gmt":"2025-06-23T12:16:11","slug":"banderas-corporation-is-considering-the-purchase-of-a-machine-that-would-cost79000","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/banderas-corporation-is-considering-the-purchase-of-a-machine-that-would-cost79000\/","title":{"rendered":"Banderas Corporation is considering the purchase of a machine that would cost79,000."},"content":{"rendered":"\n<p>Banderas Corporation is considering the purchase of a machine that would cost<br>79,000. By reducing labor and other operating costs, the machine would provide annual cost savings of<br>12,871 &#8211;<br>35,692 $63,352<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-green-cyan-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p>To determine whether Banderas Corporation should purchase the machine, we need to evaluate its cost against the expected annual cost savings. The cost of the machine is $79,000, and the annual savings it provides is $12,871.<\/p>\n\n\n\n<p>To assess whether the investment is worthwhile, a common approach is to calculate the <strong>payback period<\/strong> \u2014 the time it takes for the savings to repay the initial investment. This is done by dividing the cost of the machine by the annual savings:<\/p>\n\n\n\n<p><strong>Payback Period = $79,000 \/ $12,871 \u2248 6.14 years<\/strong><\/p>\n\n\n\n<p>This means it would take a little over six years for the company to recover its investment in the machine. Whether this is a good investment depends on the expected useful life of the machine and the company&#8217;s required payback period or internal rate of return.<\/p>\n\n\n\n<p>Now, regarding the numbers $35,692 and $63,352, we assume they are alternative savings figures under different scenarios. Let&#8217;s briefly evaluate them:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If the machine saves <strong>$35,692<\/strong> annually, then the payback period becomes:<br>$79,000 \/ $35,692 \u2248 <strong>2.21 years<\/strong><\/li>\n\n\n\n<li>If the machine saves <strong>$63,352<\/strong> annually, then the payback period becomes:<br>$79,000 \/ $63,352 \u2248 <strong>1.25 years<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Clearly, higher savings significantly shorten the payback period, making the investment more attractive.<\/p>\n\n\n\n<p><strong>Correct Answer: $63,352<\/strong><\/p>\n\n\n\n<p>This figure represents the highest cost savings, which implies the most favorable financial return. If this estimate is realistic and achievable, then the machine is a strong investment due to its short payback period and potential to deliver substantial savings over time. However, if this number is optimistic and the actual savings are closer to $12,871, the long payback period may not justify the investment. Therefore, Banderas Corporation should carefully evaluate the assumptions behind these estimates before making a decision.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"722\" height=\"1024\" src=\"https:\/\/gaviki.com\/blog\/wp-content\/uploads\/2025\/06\/learnexams-banner10-260.jpeg\" alt=\"\" class=\"wp-image-33946\" srcset=\"https:\/\/gaviki.com\/blog\/wp-content\/uploads\/2025\/06\/learnexams-banner10-260.jpeg 722w, https:\/\/gaviki.com\/blog\/wp-content\/uploads\/2025\/06\/learnexams-banner10-260-212x300.jpeg 212w\" sizes=\"auto, (max-width: 722px) 100vw, 722px\" \/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Banderas Corporation is considering the purchase of a machine that would cost79,000. By reducing labor and other operating costs, the machine would provide annual cost savings of12,871 &#8211;35,692 $63,352 The Correct Answer and Explanation is: To determine whether Banderas Corporation should purchase the machine, we need to evaluate its cost against the expected annual cost [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-33938","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33938","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=33938"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33938\/revisions"}],"predecessor-version":[{"id":33947,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/33938\/revisions\/33947"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=33938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=33938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=33938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}