4. If the store were to choose Plan A, then which of the following amounts would be closest to the total amount that the store would spend in the first year for ATM purchase and installation, maintenance, and cash loading?
Answer: C
The total amount that the store would spend in the first year for Plan A is closest to 11,800.
By choosing Plan A, the store incurs a one-time purchase and installation cost of $10,000, along with ongoing monthly maintenance costs of $250 for 12 months. However, there are no cash loading costs associated with this plan. Therefore, the total expenditure for the first year would amount to $10,000 plus $3,000 in maintenance costs, resulting in a total of $13,000.
A) 1,800
This amount is incorrect as it fails to account for the substantial one-time cost of purchasing and installing the ATM, which is $10,000 alone. The ongoing monthly costs also contribute to a significantly higher total.
B) 10,000
While this option correctly lists the one-time purchase and installation cost, it disregards the additional ongoing maintenance costs incurred throughout the year. The total amount will exceed this figure once maintenance is included.
C) 11,800
This is the correct answer because it represents the total costs incurred in the first year: the initial purchase and installation cost of $10,000 plus $1,800 for maintenance costs ($250 per month for 12 months). This sum accurately reflects the overall expenditure.
D) 14,800
This amount is incorrect as it likely miscalculates the total by possibly including incorrect assumptions about cash loading costs or miscalculating maintenance costs. The total should not exceed the sum of the purchase and maintenance costs provided.
E) 16,000
This option is also incorrect as it overestimates the total amount spent by including costs that are not applicable under Plan A, particularly cash loading costs which are not part of this plan.
Conclusion
The total expenditure for the store under Plan A amounts to $11,800 when considering the one-time purchase cost and the monthly maintenance fees. All other options either underestimate or overestimate the total costs by failing to account for the necessary expenses involved in maintaining the ATM. Thus, Plan A's financial implications lead to the definitive choice of option C.