Use the Information for the Question(s)below

question 49

Multiple Choice

Use the information for the question(s) below.
Your firm needs to invest in a new delivery truck.The life expectancy of the delivery truck is five years.You can purchase a new delivery truck for an upfront cost of $200,000,or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month) .Your firm can borrow at 6% APR with quarterly compounding.
-The present value (PV) of the lease payments for the delivery truck is closest to:

• A)$206,900
• B)$207,050
• C)$207,680
• D)$198,420

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Definitions:

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Base-Rate Information

Statistical information about the relative frequency of events or characteristics within a given population.

Concentrated Practice

An intense form of study or skill acquisition in which an individual focuses their efforts on improving a particular area or task for a short, dedicated period of time.

Expertise

The skill or knowledge an individual has acquired in a particular area, often as a result of experience or training.