A Piece of Equipment Has a Cost of $20,000

question 8

Multiple Choice

A piece of equipment has a cost of $20,000.The equipment will provide cost savings of $3,500 each year for ten years,after which time it will have a salvage value of $2,500.If the company's discount rate is 12%,what is the equipment's net present value? (Ignore income taxes in this problem.) (Do not round your intermediate calculations and round the final answer to the nearest whole dollar.)

• A) ($224).
• B) $581.
• C) $546.
• D) $17,500.

Recognize the mechanisms used by markets to mitigate adverse selection and information asymmetry.

Identify market failures and government interventions aimed at correcting them.

Calculate and understand consumer surplus and producer surplus from transactions.

Distinguish between different types of market problems such as moral hazard and adverse selection.

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Definitions:

Foot-in-the-door Phenomenon

The tendency for people to comply with a large request after first agreeing to a small, related request.

Decorative Pumpkins

Pumpkins used primarily for ornamental purposes, especially during autumn and Halloween, rather than for consumption.

Cognitive Dissonance

The mental discomfort experienced when holding two or more contradictory beliefs, attitudes, or values, which often leads to efforts to reduce the discomfort through changing attitudes or beliefs.

Fundamental Attribution Error

The inclination to attribute others' actions too much to their character traits while overlooking the role of environmental contexts.