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deciding between two photocopier options

deciding between two photocopier options

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The College of Business is deciding between two photocopier options. The first is to lease a high-end machine for $8,400/year. The lease is all-inclusive so the only additional costs are the cost of paper, which is $0.006/sheet. The other option is to purchase a machine. The cost is $5,000 and the per sheet cost increases (toner, maintenance) to $0.039. Which option is preferred if the annual copy volume is expected to be 270,000? a. The low-end machine is better at Q=270000. b. None of the other options. c. The College is indifferent between options at Q=270000. d. The high-end machine is better at Q=270000.
Transcribed Image Text:The College of Business is deciding between two photocopier options. The first is to lease a high-end machine for $8,400/year. The lease is all-inclusive so the only additional costs are the cost of paper, which is $0.006/sheet. The other option is to purchase a machine. The cost is $5,000 and the per sheet cost increases (toner, maintenance) to $0.039. Which option is preferred if the annual copy volume is expected to be 270,000? a. The low-end machine is better at Q=270000. b. None of the other options. c. The College is indifferent between options at Q=270000. d. The high-end machine is better at Q=270000.
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