A firm can lease a truck for 5 years at a cost of $49,000 annually. It can instead buy a truck at a cost of $99,000, with annualmaintenance expenses of $29,000. The truck will be sold at the end of 5 years for $39,000.a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Answer is complete but not entirely correct.Equivalent annual costS35,501.30xb. Which is the better option?BuyLease

When the assets under consideration have different lives or different cash flow structures, the NPV…

Answered: A firm can lease a truck for 5 years at…

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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You are trying to decide between two mobile phone carriers. Carrier A requires you to pay$185 for the phone and then monthly charges of $54 for 24 months. Carrier B wants you to pay $105 for the phone and monthly charges of $68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.9%APR, compounded monthly. Based on cost alone, which carrier should you choose? The EAA for plan A isThe EAA for plan B isThe EAA for plan C is
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You are considering either buying or leasing a vehicle. The following data have been compiled:If your interest rate is 6% compounded monthly, at what value of the vehicle at the end of 3 years (S) would make both options economically equivalent?(a) $7,711{b) $8,980(c) $9,228(d) $9,310
Deutsche Transport can lease a truck for four years at a cost of €38,000 annually. It can instead buy a truck at a cost of €88,000, with annual maintenance expenses of €18,000. The truck will be sold at the end of four years for €24,500. Ignore taxes. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%? Note: Do not round intermediate calculations. Enter your answer in euros. Round your answer to the nearest whole number. b. Which is the better option: leasing or buying? a. Equivalent annual cost b. Better option
milgard barbers decides to lease another barbershop for a 5- year period. the has a cash price of $240,000. milgard borrowed money to purchase the shop, it would have had to pay 20% interest read the (use the present value and future value tables, a financial calculator, or a spreadsheet for your calculations. if using present and future value tables or the formula method, use factor amounts rounded to five decimal places. round your final answer to the nearest cent. (click the icon to view the future value of ) (click the icon to view the future value of an ordinary annuity table .) (click the icon to view the future value of an annuity due to table) a. what are the required payments if the lease agreement requires annual payments beginning one year from today? the required payments are $ B. what are the required payments if the lease agreement requires semiannual payments beginning six months from the required payments are. C. what are the required payments if the lease agreement…
Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay PO.52 per mile. Plan B: Purchase the cars for P9.238 and economic life of three years after which it can be sold for P2,021, Gas and oil cost PO.07 per mile. Insurance is P500 per year.
Use the following information for the next TWO (2) questions: A farm must decide whether or not to purchase a new tractor. The tractor will reduce costs by P2, 000 in the first year, P2, 500 in the second, and P3, 000 in the third and final year of usefulness. The tractor costs P9, 000 today, wihile the above cost savings will be realized at the end of each year. If the interest rate is 7 percent. QUESTION NO. 3 What is the present value of cash inflaw from purchasing the tractor? Your answer QUESTION NO.4 What is the net present volue of purchasing the tractor, accept or reject? Your ariswer
You went to the car dealer to lease a car. The car is valued at $30,000 and you can drive away without putting any money down. The dealer offers you a 5 year lease with a $5,000 residual payment at the end if you want to buy the car. Assuming monthly payments of $508.32, what is the implied APR? Your answer should be close to a round number. Use a % symbol and round to the nearest 1 decimal point.....3.0% would be the form of a correct answer.
Assume the car can be purchased for 0% down for 60 months (in lieu of rebate). A car with a sticker price of $36,500 with factory and dealer rebates of $4,200 (a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)$ (b) Find the monthly payment if financed at 2.5% add-on interest for 60 months. (Round your answer to the nearest cent.)$ (c) Use the APR approximation formula to find the APR for part (b). (Round your answer to one decimal place.)%(d) State whether the 0% APR or the 2.5% add-on rate should be preferred.
As an Engineer, you are asked to consider two building proposals, which alternative do you deem superior based on the economics? (Assume the money to be used would be borrowed and paid back within the life of the structure). The nominal interest rate is at 21.4% compounding quarterly. State which method you will use and state why. ALTERNATIVE A ALTERNATIVE B Туре Steel Cement Life 20 years 20 years Initial Cost $1089 $2954 Maintenance $486/year $138/year Cost at the end of 8 $57 $64 years
Suppose you obtain a five-year lease for a Porsche and negotiate a selling price of $157,000. the annual interest-rate is 8.4%, the residual value is $76,000, and you make a down payment of $5000. Find each of the following. A) the net capitalized cost B) the money factor (round to 4 decimal places) C) the average monthly finance charge (round to the nearest cent) D) the average monthly depreciation (round to the nearest cent) and E) the monthly lease amount (round to the nearest cent)
also find the monthly payment

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