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

Nikul

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…

Leeds Limited is looking to expand its operations and increase its market share in the cell phone industry. To achieve this, they are looking to increase its current productive capacity of 100 000 cell phones a year by at least 6% for each of the next 5 years. It is considering two cell phone making machines and is unsure which to purchase: Cell Phone Machine ABC:Cell Phone Machine ABC can be imported at a landed purchase cost of R160 000 and a further R20 000 transport and installation costs will have to be incurred to get it ready for production. This machine is expected to last 5 years after which it will be sold at its scrap value of R20 000. Net cash flow from the sale of the additional production is expected to be R58 000, R63 000, R68 000, R72 000 and R51 000 respectively over the 5-year lifespan of the machine. This machine will enable Leeds Limited to achieve a 4% increase in productive capacity.Cell Phone Machine XYZ:Cell Phone Machine XYZ can be purchased locally for R190…