Use the Following Information to Answer Questions
the City

question 1

Multiple Choice

Use the following information to answer Questions
The City Swimming Pool is considering several options for maintaining the grounds around the pool area over the next ten years.One option is to buy a tractor with equipment for cleaning the underbrush and cutting the grass.A second option is to contract out with a local Garden and Nursery Center that provides this kind of service.A third option is to hire many local youths to do most of the work by hand.The City already has several small lawnmowers and grass-cutting equipment. $$\begin{array}{l}\begin{array} {lll } \text {Cost of tractor and equipment useful life 10 years }&\$220,000\\\text {Salvage value of tractor in 10 years }&20,000\\\text {Yearly cost of operator }&6,000\\\text {Yearly maintenance and upkeep, supplies, etc. }&3,000\\\text {Option \#2 }&\\\text {Yearly fees }&\$36,000\\\text {Option \#3 }&\\\text {Yearly cost of part-time labor }&\$32,000\\\text {Yearly cost of supplies, equipment repair, etc. }&1,000\\\text {Present value factors \( @ 6 \% \) }&\\\text {\( \$ 1 \) due in ten years }&.55839\\\text {Annuity of \( \$ 1 \) for 10 years }&7.36009\\\end{array}\end{array}$$
-Which of the following best describes the role of benefit-cost analysis in the capital budgeting process by governmental and not-for-profit entities?

• A)It may be used to enhance the objectivity of decision-making.
• B)Because all costs and all benefits can be quantified, it removes subjectivity from the decision process.
• C)It eliminates the role of value judgments in the decision-making process.
• D)It ensures that decisions about capital asset acquisition will be consistent with organizational goals and objectives.

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Definitions:

Funding

The act of providing financial resources, typically in the form of money, or other values such as effort or time, to support a program, project, business, or individual.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world with limited resources, which leads to the necessity of making choices on how to allocate resources.

Resources

Assets or inputs used in the production of goods and services, such as time, labor, and capital.

Economy

An extensive network of activities related to producing, consuming, and exchanging that assists in allocating limited resources.