Answer: competitive inertia
Explanation: Competitive inertia or corporate inertia refers to a company that is rigid in its way of operations and refuses to change its way of thinking as per the changing norms in the industry.
In the given case, Cajemp inc. is refusing to start making building from concrete blocks in place of brick and mortar due to their positive past experiences.
Hence from the above we can conclude that the given case illustrates competitive inertia.
Answer:
It is a better deal to keep the old equipment
Explanation:
![\left[\begin{array}{cccc}&New&Old&Differential\\$leasing cost&0&-23,000&23,000\\$operarting cost&-26,000&-12,500&-13,500\\$operating income&-26,000&-35,500&9,500\\$tax shield&4,200&0&4,200\\$Result&-21,800&-35,500&13,700\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bcccc%7D%26New%26Old%26Differential%5C%5C%24leasing%20cost%260%26-23%2C000%2623%2C000%5C%5C%24operarting%20cost%26-26%2C000%26-12%2C500%26-13%2C500%5C%5C%24operating%20income%26-26%2C000%26-35%2C500%269%2C500%5C%5C%24tax%20shield%264%2C200%260%264%2C200%5C%5C%24Result%26-21%2C800%26-35%2C500%2613%2C700%5C%5C%5Cend%7Barray%7D%5Cright%5D)
each year the new equipment generates a 13,700 adidtional cash outflow
We should check if the cost saving per year at 8% will have a present value lower than the proceed from the sale:
C 13,700.00
time 5
rate 0.08
PV $59,076.1377
As the differential cost exceeds the amount of proceed we would get if the old equipment is sold we already conclude we should keep it
Answer: Adverse selection
Explanation: In simple words, adverse selection refers to an insurance problem in which the buyer and seller of the insurance do not have same information. This occurs when the buyer deliberately hide some material facts from the insurance company.
In the given case, The company is charging more from new customers because they have perception that they take their services only when it is highly probable they have to use that.
Hence from the above we can conclude that the correct option is B.
Answer: the correct answer is a. includes a credit to Bad Debt Expense of $3,650.
Explanation: the Debt was not going to be paid but then the company received the money so it corresponds the credit to Bad Debt Expense of $3,650.
