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Pronto Delivery Is Contemplating an Investment in a Delivery Truck

question 12

Essay

Pronto Delivery is contemplating an investment in a delivery truck. The estimate of the project's price is $22,000. The delivery truck will have a life of 5 years and have a salvage value of $2,000. Annual net cash flows from the five years of operations are expected to be $6,000. If Pronto's applicable discount rate is 10%, is the project acceptable? Why or why not?


Definitions:

Punishment

The application of an aversive stimulus following some behaviour designed to decrease the probability of that behaviour.

Modelling

The process of creating representations of complex systems or behaviors to simplify analysis and understanding.

Negative Reinforcement

Negative reinforcement is a behavioral principle where the removal of an unfavorable condition strengthens or increases the likelihood of a desired behavior.

Behaviour

Refers to the actions or reactions of an object or organism, usually in relation to their environment.

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