Reference: 10-14
Jimbob Co Jimbob Co Uses a 10% Discount Rate and the Incremental Cost

question 52

Multiple Choice

Reference: 10-14
Jimbob Co. is considering two alternatives to replace a delivery truck. The following data have been gathered concerning these two alternatives: $$\begin{array} { | l | l | r | } \hline & \text { Truck A } & \text { Truck B } \\\hline \text { Purchase cost new } & \$ 50,000 & \$ 70,000 \\\hline \text { Major repairs end of year 2 } & \$ 10,000 & 8,000 \\\hline \text { Annual cash operating costs } & \$ 20,000 & \$ 18,000 \\\hline \text { Salvage value at the end of 3 years } & \$ 15,000 & \$ 20,000 \\\hline\end{array}$$ Jimbob Co. uses a 10% discount rate and the incremental cost approach to capital budgeting analysis. Both trucks are expected to have a useful life of three years.
-What is the amount of the difference in the net present values of the costs of these alternatives closest to?

• A)$12,381.
• B)$9,619.
• C)$8,381.
• D)$19,567.

Explain the role of coordination methods and the size of organizations in standardization.

Recognize the principles behind the systems/contingency and transformational models, including their adaptability and approach to management and communication.

Describe how virtual organizations operate and their temporary nature.

Understand the concept of mutual adjustment as a method of coordination.

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Definitions:

Constructing Airplane

The engineering and assembling processes involved in building aircraft.

Certain Date

A specific, identified day in the calendar on which an event is scheduled to take place or a deadline is set.

Waste Product

Any unwanted or unusable material produced during a manufacturing process, which is often discarded or recycled.

Factory Setting

An industrial environment equipped for manufacturing goods, including facilities such as production lines and machinery.