Luxury Fleet Operates a Fleet of Limousines

question 7

Multiple Choice

Luxury Fleet operates a fleet of limousines.It is currently considering replacing them with a new model.It plans to evaluate options based on the following information:
Which of the four following options should management choose?

• A)Replace the old limousines now with the standard limousines and operate for seven years,replaced in perpetuity.
• B)Replace the old limousines in three years' time with the standard limousines and operate for seven years,replaced in perpetuity.
• C)Replace the old limousines in three years' time with the deluxe limousines and operate for nine years,replaced in perpetuity.
• D)Replace the old limousines now with the deluxe limousines and operate for nine years,replaced in perpetuity.

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Definitions:

Commercial Banks

Financial institutions that offer a wide range of services, including accepting deposits, providing loans, and other investment products.

Fewer Banks

Refers to a situation in the financial sector where the number of banking institutions is reduced, which can affect the competition, availability of credit, and financial stability of an economy.

Deposits Concentrated

Deposits concentrated indicates a banking scenario where a large proportion of deposits is held by a small number of account holders.

Thrift Institutions

Savings banks and credit unions; depository institutions that historically lent money to households.