Free Preparation Discussions
MENU
AACE International CCP Exam - Topic 2 Question 6 Discussion
Topic #: 2
A used concrete pumping truck can be purchased for $125,000. The operation costs are expected to be $65,000 the first year and increase 5% each year thereafter. As a result of the purchase, the company will see an increase in income of $100,000 the first year and 5% more each subsequent year. The company uses straight-line depreciation. The truck will have a useful life of five (5) years and no salvage value. Management would like to see a 10% return on any investment. The company's tax rate is 28%.
Assuming the average life span of a lithium battery is two years and is normally distributed with a standard deviation of two months, what is the probability the battery will last between 20 months and 26 months?
Given that the average life span of the lithium battery is 24 months with a standard deviation of 2 months, we need to calculate the probability that the battery will last between 20 and 26 months.
Using the Z-score formula:
Z=XZ = frac{X - mu}{sigma}Z=X
For 20 months: Z=20242=2Z = frac{20 - 24}{2} = -2Z=22024=2
For 26 months: Z=26242=1Z = frac{26 - 24}{2} = 1Z=22624=1
Looking up these Z-scores in the standard normal distribution table:
Z = -2 corresponds to approximately 2.28%
Z = 1 corresponds to approximately 84.13%
The probability that the battery will last between 20 and 26 months is approximately 84%.
Elina
9 months agoDelmy
9 months agoAlberto
9 months agoAvery
10 months agoBillye
10 months agoAliza
10 months agoCory
10 months agoDonette
10 months agoTy
11 months agoAmmie
11 months agoBecky
11 months agoCathrine
11 months agoNobuko
11 months agoWilbert
11 months agoYuette
11 months agoThaddeus
2 years agoLashawna
2 years agoPaulina
2 years agoMaybelle
2 years agoMitsue
2 years agoMagdalene
2 years agoIluminada
2 years agoHoward
2 years agoErasmo
2 years agoDelbert
2 years agoDaron
2 years agoMadonna
2 years agoOcie
2 years agoPeggy
2 years agoFausto
2 years ago