Stan Moneymaker presently owns a 10-year-old automobile with low mileage (78,000 mile). The NADA "blue book" value of the car is $2,500. Unfortunately, the car's transmission just failed, and Stan decided to spend $1,500 to have it repaired. Now six months later, Stan has decided to sell the car, and he reasons that asking price should be $2,500+$1,500 $4,000. Comment on the wisdom of Stan's logic. (1) If he receives an offer for $3,000, Should he accept it? Explain your reasons. (2) How much is the sunk cost, if he accept the offer.
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- Phil Dunphy, a real estate agent, is considering whether he should list an unusual $755,485 house for sale. If he lists it, he will need to spend $5,573 in advertising, staging, and fresh cookies. The current owner has given Phil 6 months to sell the house. If he sells it, he will receive a commission of $20,636. If he is unable to sell the house, he will lose the listing and his expenses. Phil estimates the probability of selling this house in 6 months to be 71%. What is the expected profit on this listing? Your Answer:Mr. Russ T. Steele sels his old vehicle for $5000 (you get more if you private sale!) and pays cash for a used (but newer vehicle) that costs $10.000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The equivalent annual cost of the cash flow associated with his purchase is most nearly: $-1,850 $-3,100 $3,000 $3,800I hire Susan to sell my house. I tell her that I'm hoping to get $200,000 for the house. She tells me she needs $2,000 to make repairs on the house before it is listed for sale. I give her the $2,000. She takes my money but never makes the repairs. The house sells for $220,000. If Susan is ordered to pay restitution, she will have to pay $ 2000
- After Oliver Queen lost ownership of his company at Queen's consolidated, Mr. Queen no longer has the luxury of spending his money without care. He wants to buy a new car, and he has narrowed his choices down to two models. Model A sells for $25000, gets 25 miles/gallon, and costs $250 a year for insurance. Model B sells for $32500, gets 40 miles/gallon, and costs $315 a year for insurance. He drives about 20,000 miles a year and gas costs about $2.50 a gallon. Find how long it will take for the cost of owning Model A to surpass the cost of owning Model B.The Petersik family is considering purchasing a second home to use for short term rentals near the beach. If it purchases the house, they will place a down payment of $64,000 on the house. They estimate they will get an annual net rental profit of $8,500 after their mortgage and expenses are paid. After 18 years, they plan to pass the rental home along to their children, so assume the home has negligible salvage value. What would be the ERŘ if the Petersik family decides to invest in a rental home, assuming they keep the home for 18 years? Assume their MARR is 13%. Should the Petersik family invest in the rental home?Mr. Jones, the owner of a small service business, decided to give his personal truck to the business permanently. He believes the truck is worth $40,000, although Kelly Blue Book has a fair market value of $25,000. You're the accountant and, Mr. Jones tells you to record the truck on the books for $40,000. Question: Which value will you use and why?
- Mr. Jhonny bought a car worth P900,000 last January 1, 2000, and intend to sell it for P300,000 after its 10-year life. (c) If, on June 30, 2003, he decided to sell the old car at book value and buy a new car for P1,000,00O, how much more money should jhonny borrow to buy the new car if he used the straight-line method in computing the depreciation every 6 months and made it a point to deposit the said amount in a bank that offers 10 percent compounded semiannually? :Mysty offered to sell her car to Tim for $15 000. Tim faxed a letter to her that said, "Consider it sold. I'll bring the money to you next Monday when I pick up the vehicle. Of course, for that price, I'll want you to install a new stereo in it." Tim did not hear anything more from Mysty, but he arrived at her door the following Monday with $15 000 in cash. He was delighted to find that a new stereo had been installed in the car, but disappointed when Mysty refused to accept his money or hand over the vehicle.Mysty is required to do so because there was a valid offer and acceptance. – Is this true or false?Very briefly, explain why this is true/falseI own a bike that value at $1,000. I list it for sale on Craigslist. Barney sees the bike and determine that it would be worth up to $1,500 to him. He offers me $1,200 and I accept. Before Barney can pick up the bike, Charles stops by my house to look at the bike. He determines the bike would be worth $1,700 to him and he offers me $1,500. I sell the bike to Charles. Barney successfully sues me for breach of contract. If the court orders me to pay expectation damages, what is my net gain, if any, from the sale of the bike? [Be sure to deduct the value of the bike.]
- Joy, a sole proprietor involved in AirBnB, needs to sell almost all of his apartments. The selling prices were originally 500,000 on average. Because of circumstances, she had to quickly sell these at 350,000 on average less a 10% commission payable to whoever referred the buyers to her. What is the depreciated replacement value?John's Auto is a successful business that has a substantial profit each year. The auto dealership has purchased an antique car for $11,000. John, the proprietor, is almost certain that it will go up in price, and from the research he has done he believes that he can sell the car for $18,000 in 4 years. Although he plans to sell the car for more than it is worth currently, the government still allows him to claim depreciation at a CCA rate of 30%. Maria, one of his accountants, says John should not bother claim CCA because it won't save him money overall, and it will just mean he will have to pay back all his tax savings from years 1 to 3 at the end of year 4. Another accountant, Jesse, claims that John should still depreciate the vehicle each year because it will save him money overall, even though he will probably have to pay the government a significant amount of tax in year 4. What should John do and why? Support your answer with detailed calculations (hint: develop a very…Rebecca is moving away from New York City for her new job, so she must buy a car rather than rely on public transit. The new car she is considering will cost $ 18,000 to buy, $ 1,500 per year to insure, and $ 500 per year for maintenance after the 3-year warranty expires. She would keep the car for 7 years when it will have a salvage value of $ 7,000. She has found a 2-year-old car that is the same model for $ 13,000. The 3-year warranty is transferrable, so the annual maintenance cost of $500 starts in year 2. Because the car is less valuable, insurance is $300 per year less than for the new car. After 5 years, the vehicle will be 7 years old and will have the same salvage value of $ 7,000.Rebecca is ignoring costs for fuel, oil, tires and registration, because the two vehicles will have the same costs. If her interest rate is 9%, how much cheaper is the used car (difference of EAC of two vehicles)