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Kristen Is Planning to Add New Mulch to All the Landscaping

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Essay

Kristen is planning to add new mulch to all the landscaping beds around her house.She has determined the quantity of mulch she will need and identified these two options for getting the mulch to her house:
1.Kristen can have all the mulch delivered to her yard in one dump truck for $450.
2.Kristen can make four trips to the garden center with her pickup truck and haul it herself.It will cost her $75 per load for the mulch,plus $25 in fuel and truck wear per load.She estimates it will take about five hours to haul and unload all four loads.

What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?


Definitions:

Prevailing Rate

The current interest rate or wage rate for a particular industry or geographic location.

Present Value

The value today of a sum of money or cash flows expected in the future, discounted at a certain rate of return.

Maturity Value

The amount that will be paid out or received, including principal and interest, upon the expiration or maturity of a financial instrument.

Notes Receivable-Lewisburg Fabricators

A specific financial claim or loan that Lewisburg Fabricators holds against a debtor, documented through a promissory note indicating the amount owed and payment terms.

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