PV annuity factor for 10%, 5 years = 3.791.)
Student Answer:
2.5 years.
3.0 years.
3.3 years.
3.6 years.
4.0 years.
Question 14. Question : A truck, costing $25,000 and
uninsured, was wrecked the very
first day it was used. It can either be disposed of for $5,000
cash
and be replaced with a similar truck costing $27,000, or
rebuilt for
$20,000 and be brand new as far as operating characteristics
and
looks are concerned. The net relevant cost of the replacing
option
is:
Student Answer:
$5,000.
$20,000.
$22,000.