OM Construction Company Must Choose Between Two Types of Cranes

question 46

Multiple Choice

OM Construction Company must choose between two types of cranes. Crane A costs
$600,000, will last for 5 years, and will require $60,000 in maintenance each year. Crane B costs $750,000 and will last for seven years and will require $30,000 in maintenance each year. Maintenance costs for cranes A and B are incurred at the end of each year. The appropriate discount rate is 12% per year. Which machine should OM Construction purchase?

• A) Crane A as EAC is $226,444
• B) Crane B as EAC is $194,336
• C) Crane A as the PV is $816,286
• D) Cannot be calculated as the revenues for the project are not given

Differentiate between short-run and long-run outcomes in monopolistic markets.

Apply economic concepts to interpret graphical representations of market conditions in monopolistic and oligopolistic markets.

Explain the concept of rent-seeking behavior in the context of market protection granted by the government.

Understand the implications of marginal cost pricing versus average cost pricing for regulated monopolies.

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Definitions:

Deception

The act of misleading or tricking someone through false statements or actions.

Goal Oriented

A focus on setting and achieving objectives to accomplish specific aims.

Influence Process

The methods or techniques used to affect or shape the behavior, attitudes, or perceptions of others.

Senior Management

The top level of management who have the day-to-day responsibilities of managing a company or corporation.