A Garage Is Comparing the Cost of Buying Two Different

question 68

Multiple Choice

A garage is comparing the cost of buying two different car hoists. Hoist A will cost $20,000, will require servicing of $1000 every two years, and last ten years. Hoist B will cost $15,000, require servicing of $800 per year, and last eight years. If the cost of capital is 7%, which is the better option, given that the firm has an ongoing requirement for a hoist?

• A) Hoist B, since it has a greater equivalent annual annuity.
• B) Hoist A, since it has a greater equivalent annual annuity.
• C) Hoist B, since it has a greater present value (PV).
• D) Hoist A, since it has a greater present value (PV).

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Definitions:

Observers

Individuals who watch and record behaviors or events as part of a study or assessment without directly interacting with the subjects.

Number of Times

Refers to the frequency with which a specific event or occurrence happens.

Triadic Reciprocality Model

A concept in psychology, also known as reciprocal determinism, which posits that human behavior is influenced by personal factors, behavior, and the environment, all of which interact with each other.

Includes

Generally means to contain as a part of something. In various contexts, it can refer to the incorporation of elements or features within a larger system or set.