Higgins Ltd is considering the purchase of one out of two acceptable pieces of equipment. Each design is expected to have individual advantages.

Required
(a) What additional financial information does the board need in order to make a decision?
(b) Would you rely only on this information to make a decision? If not, why not?
(c) If the calculated returns all exceed the entity’s required minimum rate, which design would you recommend? Why?

Transcribed Image Text:

ARR (%) Equipment A 35 Equipment B 30