A Garage Is Comparing the Cost of Buying Two Different

question 69

Multiple Choice

A garage is comparing the cost of buying two different car hoists.Hoist A will cost $20,000,will require servicing of $1000 every two years,and last ten years.Hoist B will cost $15,000,require servicing of $800 per year,and last eight years.If the cost of capital is 7%,which is the better option,given that the firm has an ongoing requirement for a hoist?

• A)Hoist A,since it has a greater present value (PV).
• B)Hoist B,since it has a greater present value (PV).
• C)Hoist A,since it has a greater equivalent annual annuity.
• D)Hoist B,since it has a greater equivalent annual annuity.
• E)Hoist A,since it has a lower equivalent annual annuity.

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Overextension

In language acquisition, overextension is children's use of words in a broader context than adults would, applying specific words to a wider variety of objects or situations.

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