A delivery company is looking at converting their fleet of gasoline vans to electric vehiclesThe all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today’s MRC to $62,500.00 for each new electric vanThe newer vans are expected to increase future MRP by $ 12,000.00 each year and have a productive life for five years. At the enc of the fifth year, the firm expects to sell the used vans for a salvage value of 30,000.00This firm is ing funds at 6% interest. The table indicates the possible investment for one electric vehicle.

A delivery company is looking at converting their fleet of gasoline vans to electric vehiclesThe all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today’s MRC to $62,500.00 for each new electric vanThe newer vans are expected to increase future MRP by $ 12,000.00 each year and have a productive life for five years. At the enc of the fifth year, the firm expects to sell the used vans for a salvage value of 30,000.00This firm is ing funds at 6% interest. The table indicates the possible investment for one electric vehicle.

Name: A delivery company is looking at converting their fleet of gasoline va
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Description: A delivery company is looking at converting their fleet of gasoline vans to electric vehiclesThe all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 3P

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A delivery company is looking at converting their fleet of gasoline vans to electric vehicles. The all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today's MRC to $62,500.00 for each new electric van. The newer vans are expected to increase future MRP by $12,000.00 each year and have a productive life for five years. At the end of the fifth year, the firm expects to sell the used vans for a salvage value of $30,000.00. This firm is borrowing funds at 6% interest. The table indicates the possible investment for one electric vehicle.
3. A delivery company is looking at converting their fleet of gasoline vans to electric vehicles. The all electric vans cost $75,000.00 today, minus an electric vehicle tax credit $7,500.00 and the reduced maintenance and fuel cost of $5,000. This brings today's MRC to $62,500.00 for each new electric van. The newer vans are expected to increase future MRP by $12,000.00 each year and have a productive life for five years. At the end of the fifth year, the firm expects to sell the used vans for a salvage value of $30,000.00. This firm is borrow- ing funds at 6% interest. The table indicates the possible investment for one electric vehicle. Year 1 2 3 4 5 Total V Total V Future Value Present Value Discount Factor
Your company is deciding whether to purchase a durable delivery vehicle or a short-term vehicle. The durable vehicle costs $25 000 and should last five years. The short-term vehicle costs $10 000 and should last two years. If the cost of capital for the company is 15 per cent, then what is the equivalent annual cost for the best choice for the company? (Round to the nearest dollar.) $6151, short-term vehicle $5000, either vehicle $7458, long-term vehicle $5000, short-term vehicle
A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines. The cars average 120,000 miles a year. Use EUAC to determine the more economical choice if interest rate is 5%. Diesel Gasoline Vehicle cost $ 24,000.00 $ 19,000.00 Useful life (in years) 5 4 Fuel cost per gallon $ 3.52 $ 3.68 Mileage per gallon 30 25 Annual repairs $ 900.00 $ 700.00 Annual insurance premium $1,000.00 $1,000.00 End of useful life resale value $ 4,000.00 $ 6,000.00 What is value of EUAC for diesel engine? What is the value of EUAC for gasoline engine?
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Carla Vista Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $56,760. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,600. At the end of 8 years, the company will sell the truck for an estimated $28,600. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset’s estimated useful life. Larry Newton, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company’s cost of capital is 8%.
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Your company is considering the replacing an old machine with a more efficient model. The new machine costs $39,500, will last for 7 years and save $12,900 per year in expenses. The discount rate is 18% and the tax rate is 26%. The machine will be depreciated on a straight line basis to zero. The old machine is fully depreciated and can be sold today for $2,700. A) what is the amount of initial investment required? B) what is the after-tax gain on the sale of the old machine? The old machine is fully depreciated. C) what is the amount of operating cash flow (OCF) per year? D) what is the NPV of the project?
3. The garden supply company is also considering taking out a loan and buying a small truck to save costs on deliveries. The truck costs $60,000 and is expected to earn end of year after tax net cash inflows of $10000, $15000, $20000 and $20000 for the next four years before it wears out sufficiently to be unreliable and must be sold for an estimated $10000 (after tax). a. Calculate the NPV of the truck if the interest rate on the loan is 5% pa. b. Calculate the NPV of the truck if the interest rate on the loan is 10% pa. c. Advise management of your recommendation regarding purchase of the truck based on your NPV calculations. d. Calculate the accounting rate of return on the truck investment. e. What additional advice would you give management if the required payback period was three years? All working required.
Kris Kringle Corp. needs to purchase a new delivery vehicle. The Sleigh 9000 model's purchase price is $90,000, will last for 20 years, and requires maintenance costs of $5,000 per year for the first 10 years (years 1-10) and $8,000 per year for the last 10 years (years 11-20). What is the equivalent annual cost (EAC) of this equipment at a discount rate of 12.25%? $6.602 $17957 $13991 $11,000 $6,890
Your boss has asked you to look into optimizing the van ownership strategy for your company. The companyyou work for bought a van for $54,600 for making deliveries. You expect the van to be driven 27,300 miles per year, with each mile costing you around $0.63 per mile in the first year. The operating cost per mile is expected to increase by 5% per year after the first year. The resale value of the van is expected to decrease by 20% in the first year and then by 7% per year from there on out. What is the optimal ownership period (economic life) in years assuming a MARR of 9%?