Mark Is Considering Spending $25,000 on a Farm Tractor That

question 61

Multiple Choice

Mark is considering spending $25,000 on a farm tractor that will increase his crop yield and bring additional revenues of $4,000 for each of the next 7 years. Mark should:

• A) buy the tractor because its benefits of $28,000 outweigh its costs of $25,000.
• B) buy the tractor because inflation will reduce the value of future cash flows.
• C) use present discounted value analysis to decide whether the tractor is a good investment.
• D) not buy the tractor because the payback period extends beyond three years.

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Definitions:

Left Half

Referring to the left side of a space, object, or body.

Somatic Nervous System

The part of the peripheral nervous system that handles voluntary control of body movements through the control of skeletal muscles.

Sympathetic Nervous System

A part of the autonomic nervous system that prepares the body for physical activity by accelerating the heart rate, constricting blood vessels, and raising blood pressure.

Autonomic Nervous System

A part of the nervous system that controls involuntary bodily functions, such as heart rate, digestion, and respiratory rate.