When to Replace an Asset: Nemo Haulers Is Considering Whether

question 30

Multiple Choice

When to replace an asset: Nemo Haulers is considering whether to purchase a new mini tractor for moving furniture within its warehouse. Nemo calculates that its current mini tractor generates $3,100 of cash flow per year. A new mini tractor would cost $3,000 and would provide cash flow of $4,000 per year for five years. What is the equivalent annual cash flow for the new mini tractor (round to the nearest dollar) , and should Nemo purchase the new tractor? Assume the cost of capital for Nemo is 10 percent.

• A) $3,000, do not purchase the new tractor
• B) $3,209, purchase the new tractor
• C) $4,000, purchase the new tractor
• D) $12,163, purchase the new tractor

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Definitions:

Deontological Ethical Theories

Moral theories that prioritize adherence to duty or rules over the consequences of actions in determining the rightness of actions.

Rigid And Formal

Strictly adhering to established rules, procedures, or norms without flexibility.

Universal Principles

Fundamental and widely accepted concepts or doctrines that guide behavior, practices, and beliefs across various disciplines and cultures.

Business Ethics

Principles and standards that determine acceptable conduct in business operations, focusing on fairness, transparency, and integrity.