Answer:
The labeling machine option is the best decision as it would increase the profit to 1 million dollars and the ROI to 40% and if the life span of the machine is extended, an increased profit of 200 thousand dollars would be made, but the fast-food chain would be more profitable in the long run if the contract is extended.
Explanation:
The Humble Pies is a bakery company co-owned by two friends Linda and Taylor. After a while in the business, they had two options to either sign a contract with the fast-food with a 3-year contract to purchase a packaging machinery and a supply of 2,200,000 pies at $1.50 per pie or purchase a labeling machine which would reduce the cost of labor and provide a monthly profit of $13,000.
The former in the long run (if the contract is extended) would be profitable to Humble pies, but the labeling machine option is the best decision of a short-term investment.
