You Have Heard About a New Light Bulb That Is

question 3

Multiple Choice

You have heard about a new light bulb that is costly to purchase but uses little electricity and thus allows you to save money on your utility bill. Suppose the new light bulb costs $10 today but next year your electricity bill will be $50 lower. If the interest rate is 10%, what is the net present value of buying this new light bulb and using it for one year?

• A)$40
• B)-$45.45
• C)$55
• D)$35.45

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at a given price.

Safety Inventory

The extra inventory held to mitigate the risk of stockouts due to uncertainties in demand or supply.

Warehouse Inventory

Encompasses the goods and materials held in a storage space awaiting further distribution or sale, essential for managing supply chain efficiency.

Pipeline Inventory

Inventory that is currently in transit between locations or stages in a supply chain. It represents goods that are not yet available for sale or use.