A Farm Must Decide Whether or Not to Purchase a New

question 33

Multiple Choice

A farm must decide whether or not to purchase a new tractor.The tractor will reduce costs by $2,000 in the first year,$2,500 in the second,and $3,000 in the third and final year of usefulness.The tractor costs $9,000 today,while the above cost savings will be realized at the end of each year.If the interest rate is 7 percent,what is the net present value of purchasing the tractor?

• A) $6,764
• B) $9,362
• C) $18,362
• D) None of the statements associated with this question are correct.

Identify factors affecting the choice of depreciation method, such as asset usage patterns.

Apply the units-of-production method for assets with varying usage.

Calculate and interpret the carrying amount of an asset.

Recognize and account for gains or losses on disposal of assets.

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Definitions:

Respiration

The biochemical process in living organisms involving the exchange of gases (oxygen and carbon dioxide) to produce energy.

Brainstem

A crucial part of the central nervous system that connects the brain to the spinal cord and controls vital functions such as breathing and heart rate.

Cerebrum

The largest part of the brain responsible for voluntary activities, intelligence, memory, and emotional expression.

Cerebellum

A part of the brain located at the back of the skull, responsible for coordinating movement and balance.