A Computer Services Center Has a Problem with "Malicious" Computer

question 32

Multiple Choice

A computer services center has a problem with "malicious" computer usage.The center's director has decided to hire additional personnel to monitor computer usage.In order to minimize the total cost of the malicious usage,the director should hire the number of monitors at which

• A)the marginal revenue from the last monitor equals the marginal cost of the last monitor.
• B)the decrease in the cost of malicious usage from the last monitor hired equals the cost of hiring the last monitor.
• C)the marginal benefit per dollar is equal across monitors.
• D)both b and c
• E)all of the above

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Definitions:

Unequal Lives

Refers to comparing projects or assets with different durations or expected lifetimes to make investment or capital budgeting decisions.

Equivalent Annual Annuity

A method used in capital budgeting to compare the profitability of investments with different lifespan by converting them into an equivalent annuity.

Net Present Value

The calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.