Suppose a Firm Producing Aircraft Engines Is Considering the Purchase

Multiple Choice

Suppose a firm producing aircraft engines is considering the purchase of a robotic assembly machine at a price of $4 million.The firm expects the discounted MRP of the machine to be $1 million over each of the first 3 years,and $0.5 million each in years 4 and 5,after which the machine has no value.This firm should

A) not buy the machine because its present value is less than its purchase price.
B) buy the machine because its present value is more than its purchase price.
C) be indifferent about the purchase because its present value is equal to its purchase price.
D) not buy the machine because its marginal cost is greater than its marginal revenue.
E) buy the machine because its marginal cost is less than its marginal revenue.