Question

Scenario-JG Sawmills

To meet the high production demand, Jack Wilsonthe owner of JG Sawmillsneeds to invest in a frame saw. He has narrowed down to two choices: a double cut frame CZ84 saw with chipper and a HY-200 saw with double arbor bearings. The cost of CZ84 will be $91,000, whereas the cost of HY-200 will be $110,000. The salvage value of each type is $0 (zero) and both will have a useful life of 4 years.

What would James choose if he based his decision on the return on investment (ROI)?

A. He would choose HY-200 because it has a higher ROI of 0.48.

B. He would choose CZ84 because it has a higher ROI of 0.58.

C. He would choose HY-200 because it has a higher ROI of 0.58.

D. He would choose CZ84 because it has a higher ROI of 0.48.

Answer

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