A New Machine Tool Is Expected to Generate Receipts as Follows

question 19

Essay

A new machine tool is expected to generate receipts as follows: $5,000 in year one; $3,000 in year two, nothing in the next year, and $2,000 in the fourth year. At an interest rate of 6%, what is the net present value of these receipts? Is this a better net present value than $2,500 each year over four years? Explain.

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Definitions:

Partial Reinforcement

A conditioning strategy in which a reward is not administered every time the desired response is performed, leading to more resilient behavior.

Continuous Reinforcement

A method of learning where a desired behavior is reinforced each time it is demonstrated, leading to the learning of that behavior.

Schedules

Plans that outline intended dates and times for specific activities or tasks, often used to organize and manage time efficiently.

Operant Conditioning

An educational method where the intensity of an action is altered through rewards or penalties.