Super Haulers Is a Hauling Company and Delivers Large and Heavy

question 97

Multiple Choice

Super Haulers is a hauling company and delivers large and heavy materials to construction job sites. Super Haulers is considering purchasing a new dump truck that costs $185,000 and the managers of Super Haulers have estimated that the new dump truck will generate $50,000 a year in future operating profit for the next four years. At the end of four years, Super Haulers can sell the dump truck at a salvage price of $20,000. If the discount rate is 5 percent, which of the following is true if the managers of Super Haulers are profit- maximizing?

• A)The manager should make the investment because the net present value is negative.
• B)The manager should not make the investment because the net present value is negative.
• C)The manager should make the investment because the net present value is positive.
• D)The manager should not make the investment because the net present value is positive.

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Definitions:

Corrective

Intended to rectify or improve a situation, often by fixing an error or resolving a problem.

Disease Prevention

The methods and strategies employed to prevent the onset of diseases, aiming to reduce the risk of diseases spreading or occurring.

Food Shortages

Situations where the food supply is insufficient to meet the nutritional needs of a population, often leading to hunger and malnutrition.