13. Fenton andFarrah Frien dly, husband-and-wife car dealers, are soon going to open anew dealership. They have three offers: from a foreign compact car company, from a U.S.-produ cer of full-sized cars, and from a tru ck company. The success of each type of dealership will depend on how much gasoline is going to be available during the nextfew years. The profit from each type of dealership, given the availability of gas, is shown in thefollowing payoff table: Gasoline Availability Shortage Surplus Dealership .6 .4 Compact carr $ 300 000 S150.000

13. Fenton andFarrah Frien dly, husband-and-wife car dealers, are soon going to open anew dealership. They have three offers: from a foreign compact car company, from a U.S.-produ cer of full-sized cars, and from a tru ck company. The success of each type of dealership will depend on how much gasoline is going to be available during the nextfew years. The profit from each type of dealership, given the availability of gas, is shown in thefollowing payoff table: Gasoline Availability Shortage Surplus Dealership .6 .4 Compact carr $ 300 000 S150.000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Candle Light Bus Lines Ltd. runs a series of bus routes between cities across Canada. A new route, between Kenora and Thunder Bay, has been planned for next year. The sales manager has come up with a series of possible passengers that would use the route in the upcoming year. She tells you that passengers could range between 20,000 and 40,000 per year and that each ticket would be $25 per trip. Because of the availability of buses to service the route, the estimated passengers would be in increments of 10,000. The controller of the company provides you with the following information: Costs per passenger per trip: Fuel $5 Driver $4 Selling $2 Admin $1 In addition, she informs you that Facility Overhead will be $100,000 and Selling and Admin Overhead will be $50,000, regardless of the number of trips made in the year. Instructions a) Prepare a flexible budget for the company based on the above information for 20,000, 30,000, and 40,000 passengers. b) Assume that there were actually…
A company is in need of a small vehicle to make deliveries. It is intending to choose between 2 options. One option is to buy a new 2 wheeler that would cost Rs.75000/- and serve for 8 years, The other alternative is to buy a second hand vehicle for Rs.45000/- now that could serve the firm for 4 years. Thereafter the firm can buy another second hand vehicle for Rs.40,000/- that lasts for another 4 years. The firm can utilize the WDV of the vehicle's whenever they are discarded. The firm pay 30% tax and is allowed to claim depreciation on vehicles of 25% on WDV basis. If the cost of capital for the firm is 12% which of the option the firm should adopt?
You are considering buying a new Honda CR-V and are trying to choose between the gas-only model ($26,500 and 28 miles/gallon) and the gas-electric hybrid model ($31,700 and 40 miles/gallon). If gasoline costs $2.80/gallon, how many miles per year must you drive for the hybrid to be worth the extra cost? Assume you will sell the car after 5 years for 60% of what you paid for it (Hondas hold their value really well) and your MARR is 6% per year
Nikul
Q4 Cuci Kereta Sdn Bhd is evaluating two alternatives: the purchase of an automatic washing system or a semi-automatic washing system. One person will operate the automatic washing machine. On the other hand, the semi-automatic washing system require two workers to operate the system. Table 4 shows the system information. The company estimate 3,000 cars can be washed per year with expected rate of return of 10% per year Evaluate this option with suitable graph for recommendation to the company whether to purchase an automatic or a semi-automatic washing system. Table 4: System Information Semi-automatic Washing System Automatic Washing System First Cost 110,000 20,000 (RM) Salvage (RM) 25,000 3,000 Life 10 (years) Labour Cost 10 10 (RM per hour per person) Wash Car 12 (units per hour) 4,000 for first year and increase 2,000 every year Maintenance Cost 1,500 (RM per year)
Because Natalie has had such a successful first few months, she is considering other opportunities to develop her business. One opportunity is the sale of fine European mixers. The owner of Kzinski Supply Co. has approached Natalie to become the exclusive distributor of these fine mixers in her state. The current cost of a mixer is approximately $575, and Natalie would sell each one for $1,150. Natalie comes to you for advice on how to account for these mixers. Each appliance has a serial number and can be easily identified. Natalie asks you the following questions. 1. "Would you consider these mixers to be inventory or should they be classified as supplies or equipment?" 2. 3. "I've learned a little about keeping track of inventory using both the perpetual and the periodic systems of accounting for inventory. Which system do you think is better? Which one would you recommend for the type of inventory that I want to sell?" "How often do I need to count inventory if I maintain it using…
Question: What is the project NPV? You have determined in your mind that you would like to have a businessof your own, although your father runs a family restaurant in yourlocal city. You have therefore, decided to have a medium size snackand cocktails bar which will accommodate the cruise ship passengerswho visit your city. You plan to keep the business for five yearsafter which you will sell it off to your brother John for $2,000,000and go off to do your Master’s Degree in the UK. Though you will beoccupying the establishment from your grandmother for free, you havedecided that you need to make some improvements to the property whichwill cost you $1,500,000. Additionally, you will spend $275,000 inbar stools, tables and decorations. If this space had been leased out,it would have fetched a lease rental of $75,000 per year. You willdepreciate the assets over 7 years using MACRS. You have determinedthat you would need an average cash balance of $15,000 and inventoryof $20,000 while…
reases Imagine yourself in the position of Thomas Pierce . president of Greymare Bus Lines. Your firm was established by your grandfather, who was quick to capitalize on the growing demand for transportation between Widdicombe and nearby townships. The company has owned all its vehicles from the time the company was formed: you are now reconsidering that policy. Your operating manager wants to buy a new bus costing $100,000. The bus will last only eight years before going to the scrap yard. You are convinced that investment In the additional equipment is worthwhile. However, the representative of the bus manufacturer has pointed out that her firm would also be willing to lease the bus to you for eight annual payments of $16,200 each. Greymare would remain responsible for all maintenance, Insurance, and operating expenses. If Greymare does not own the bus it cannot depreciate it and therefore, it gives up a valuable depreciation tax shield. We assume depreciation would be calculated…
Please show work and explanations on how you got your answers.
You are the CFO for Play Now sports and you have 2 different machines to consider for purchase. The machines will be used to fabricate large size rubber balls that will sell for $30 each. The first machine will cost $45,000 and it will last for a period of 6 years. It will allow you to save $15,000 in year 1, $14,000 in year 2, $13,000 in year 3, $12,000 in year 4, $11,000 in year 5 and $10,000 in year 6. Using this machine will generate variable costs of products sold of $15 each. The other option is a machine that will last for only 5 years. It will cost $30,000 and it will save $8,000 each year. Variable costs, using this machine will be $18 each. Kruger has total fixed costs of $120,000 per year. a. Calculate the PAYBACK PERIOD for each machine for the 2 machines. b. Calculate the Return on investment for each machine. c. Calculate the break-even point for each machine. d. Which machine should Play Now pick and why ?

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