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Performance: 'decision model' and 'performance evaluation model'

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1. Consider these data regarding Douglas County's photocopying requirements:

Old Equipment Proposed Replacement Equipment
Useful life, in years 5 3
Current age, in years 2 0
Useful life remaining, in years 3 3
Original cost $25,000 $15,000
Accumulated depreciation 10,000 0
Book value 15,000 Not acquired yet
Disposal value (in cash) now 3,000 Not acquired yet
Disposal value in 3 years 0 0
Annual cash operating costs for power, maintenance, toner, and supplies 14,000 7,500

1. Suppose the "decision model" favored by top management consisted of a comparison of a three-year accumulation of cash under each alternative. As the manager of office operations, which alternative would you chose? Why?

2. Suppose the "performance evaluation model" emphasized the minimization of overall costs of photocopying operations for the first year. Which alternative would you choose?

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1. Suppose the "decision model" favored by top management consisted of a comparison of a three-year accumulation of cash under each alternative. As the manager of office operations, which alternative would you chose? Why?

In this particular case, I ...

Solution Summary

The solution examines decision models and performance evaluation models for Douglas County's photocopying requirements.

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