A Garage Is Comparing the Cost of Buying Two Different

question 105

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.

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Definitions:

Transformation

A broad term referring to the process of change or conversion, often used in the context of biological cellular change or mathematical transformations.

Swern Oxidation

A method of oxidizing primary and secondary alcohols to aldehydes and ketones using dimethyl sulfoxide (DMSO), oxalyl chloride, and a base.

NaOCl/TEMPO

A combination of sodium hypochlorite and TEMPO, used as an oxidizing agent system in organic chemistry for the selective oxidation of alcohols to aldehydes or ketones.

DMP Reagent

A powerful oxidizing agent, Dess-Martin Periodinane, used in organic chemistry to convert primary alcohols to aldehydes and secondary alcohols to ketones with high selectivity.