AACE International CCP Exam - Topic 6 Question 14 Discussion

Actual exam question for AACE International's CCP exam

Question #: 14
Topic #: 6

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%.

All of the following are characteristics of standard normal distribution, except:

Ameans and median are not equal

Babout 68% of its value is within one standard deviation

Cthe total area underneath the curve is 1

Dthe curve shape is symmetrical

Show Suggested Answer

Suggested Answer: A

The statement that the 'means and median are not equal' is incorrect for a standard normal distribution. In a standard normal distribution, the mean, median, and mode are all equal, as the distribution is perfectly symmetrical. The correct characteristics of a standard normal distribution are that approximately 68% of the values fall within one standard deviation of the mean, the total area under the curve is 1, and the curve shape is symmetrical.

by Stephanie at Nov 14, 2024, 11:19 PM

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Precious

5 months ago

Standard normal distribution has a total area of 1, that's a fact!

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Ranee

6 months ago

Yup, B, C, and D are all true for normal distributions.

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Tiffiny

6 months ago

Wait, are we sure about the 68% thing? Seems off.

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Jacqueline

6 months ago

Totally agree, A is definitely the odd one out here.

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Gilbert

6 months ago

The means and median are equal in a normal distribution.

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Barbra

6 months ago

I'm a bit confused about the percentages related to standard deviations. I know about the 68% rule, but I can't recall if it applies here.

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Bok

7 months ago

I practiced a similar question about the characteristics of distributions, and I feel like the symmetry of the curve is a key point.

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Mendy

7 months ago

I think option A is definitely the one that doesn't belong because the mean and median should be equal in a standard normal distribution, right?

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Jani

7 months ago

I remember studying the properties of normal distribution, but I'm not completely sure if the mean and median are always equal.

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Audra

7 months ago

Alright, let's do this! I'm pretty confident in my ability to work through these types of finance and statistics problems. I'll make sure to show all my work and double-check my answers before submitting.

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Brandee

7 months ago

This looks like a tricky one, but I think I can handle it. I'll start by breaking down the financial information and calculating the net present value of the truck purchase. Then I'll review the standard normal distribution characteristics and identify the one that doesn't apply.

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Felicia

7 months ago

Hmm, I'm a bit confused by the wording of the question. It seems to be asking about characteristics of the standard normal distribution, but the details provided are about a concrete pumping truck purchase. I'll need to make sure I understand how these two parts are connected.

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Ammie

7 months ago

Okay, this looks like a pretty complex question involving financial calculations and standard normal distribution. I'll need to carefully read through the details and think through the steps to solve this.

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