AACE International Certified Cost Professional (CCP) Exam CCP Question # 39 Topic 4 Discussion

AACE International Certified Cost Professional (CCP) Exam CCP Question # 39 Topic 4 Discussion

CCP Exam Topic 4 Question 39 Discussion:
Question #: 39
Topic #: 4

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?


A.

82%


B.

75%


C.

90%


D.

84%


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