(Ignore Income Taxes in This Problem

question 154

Multiple Choice

(Ignore income taxes in this problem.) Morrel University has a small shuttle bus that is in poor mechanical condition. The bus can be either overhauled now or replaced with a new shuttle bus. The following data have been gathered concerning these two alternatives:
The University could continue to use the present bus for the next seven years. Whether the present bus is used or a new bus is purchased, the bus would be traded in for another bus at the end of seven years. The University uses a discount rate of 12% and the total cost approach to net present value analysis.
-If the present bus is repaired,the present value of the annual cash operating costs associated with this alternative is closest to:

• A) $(36,500)
• B) $(16,200)
• C) $(47,200)
• D) $(54,800)

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Definitions:

Feedback System

A loop system where outputs of a process are fed back as inputs, influencing the ongoing operation of the system. This concept is widely applied in biological, mechanical, and social systems.

CCK

Cholecystokinin, a hormone that stimulates the digestion of fat and protein.

Sensory Specific Satiety

This refers to the reduction in appetite or desire to continue consuming a specific food after a certain amount of it has been eaten, without diminishing the appetite for different foods.

Ziegarnik Effect

The tendency to remember uncompleted or interrupted tasks more easily than tasks that have been completed.