(Present Value Tables Are Required

question 86

Multiple Choice

(Present value tables are required. ) The Speedy-Delivery Company has two options for its delivery truck.The first option is to purchase a new truck for $15,000.The new truck will have a useful life of 5 years and a residual value of $2,000.Operating costs for the new truck will be $200.The second option is to overhaul its existing truck.The cost of the overhaul will be $8,000.The overhauled truck will have a useful life of 5 years and a residual value of $0.Operating costs for the overhauled truck will be $600.Using Speedy's discount rate of 5%,which option is better and by what amount?

• A)Better to overhaul by $3,700
• B)Better to purchase new by $3,700
• C)Better to overhaul by $5,144
• D)Better to purchase new by $5,144

---

Definitions:

Low-context

A communication style where messages are explicit, detailed, and direct, with little reliance on the context or non-verbal cues to convey meaning.

North America

A continent located in the northern hemisphere, bordered by the Atlantic Ocean to the east and the Pacific Ocean to the west.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often accompanied by a tendency to view other cultures through one’s own cultural lens.

Culturally Diverse

Refers to the inclusion of individuals from various cultural, ethnic, and racial backgrounds.