Domestic Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $52,000. The object is to save onhorse transporter rentals.Marsha had been renting a transporter every other week for $217 per day plus $1.85 per mile. Most of the trips are 80 or 100 miles intotal. Marsha usually gives the driver, Joe Laminitis, a $50 tip. With the new transporter she will only have to pay for diesel fuel andmaintenance, at about $0.62 per mile. Insurance costs for Marsha's transporter are $2,050 per year.The transporter will probably be worth $32,000 (in real terms) after eight years, when Marsha's horse Spike, will be ready to retire.Assume a nominal discount rate of 10% and a 2% forecasted inflation rate. Marsha's transporter is a personal outlay, not a business orfinancial investment, so taxes can be ignored.Calculate the NPV of the investment.Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.Answer is complete but not entirely correct.NPV$31,915

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Description: Domestic Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $52,000. The object is to save onhorse transporter rentals.Marsha had been renting a transporter every other week for $217 per day plus $1.85 per m

The net present value aids in determining the viability of the venture. It looks at the projected…

Answered: Calculate the NPV of the investment.…

Business

Finance

Calculate the NPV of the investment. Note: Do not round intermediate calculations. Round your answer to the nearest whole dollar amount. Answer is complete but not entirely correct. NPV $ 31,915

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter8: Vehicle And Other Major Purchases

Section: Chapter Questions

Problem 1FPC

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Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $54,000. The object is to save on horse transporter rentals.Marsha had been renting a transporter every other week for $219 per day plus $1.95 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives Joe Laminitis, the driver, a $30 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.64 per mile. Insurance costs for Marsha’s transporter are $2,150 per year.The transporter will probably be worth $34,000 (in real terms) after eight years, when Marsha’s horse Spike will be ready to retire. Assume a nominal discount rate of 7% and a 4% forecasted inflation rate. Marsha’s transporter is a personal outlay, not a business or financial investment, so taxes can be ignored.Calculate the NPV of the investment. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $35,000. The object is to save on horse transporter rentals. Marsha had been renting a transporter every other week for $200 per day plus $1.00 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives the driver, Joe Laminitis, a $40 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.45 per mile. Insurance costs for Marsha’s transporter are $1,200 per year. The transporter will probably be worth $15,000 (in real terms) after eight years, when Marsha’s horse Spike, will be ready to retire. Assume a nominal discount rate of 9% and a 3% forecasted inflation rate. Marsha’s transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Calculate the NPV of the investment.
Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $36,000. The object is to save on horse transporter rentals. Marsha had been renting a transporter every other week for $201 per week plus $1.05 per mile. Most of the trips are 90 miles in total. Marsha usually gives the driver a $45 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $.46 per mile. Insurance costs for Marsha’s transporter are $1,250 per year. The transporter will probably be worth $16,000 (in real terms) after eight years, when Marsha’s horse Nike will be ready to retire. Assume a nominal discount rate of 10% and a forecasted inflation rate of 4%. Marsha’s transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Hint: All numbers given in the questions are in real terms. Assume CF at end of year, for simplicity. Calculate the NPV of the investment. (Do not round intermediate calculations.…
Vashti has a suburban home within walking distance of the railroad. She commutes to work in the city at a cost of $366.50 a month. She also rents a car every weekend, which costs $450 a month including insurance and fuel. She is considering purchasing a new car for cash to replace commuting and rental costs. It would cost $22,000, get 31 miles per gallon, and have an estimated resale value of $8,000 after five years. After buying this car, Vashti would drive 20,000 miles per year and have maintenance and repairs of $1,400 per year, insurance of $1,500 per year, and fuel costs of $2.50 per gallon. Assume that all costs occur at the end of the year and that she sells the car at the end of the fifth year. If Vashti's discount rate is 7 percent after tax, should she purchase the car?
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1.Link wants to make $100,000 after tax on his new venture into selling pizza-on-a-stick, using a "push along" cart at the beach. For each pizza-on-a-stick, he incurs raw material costs of $5 and sells them for $10. He pays a salary to his friend Zelda, who operates the cart for $50,000. If he buys the cart himself, he will incur fixed expenses of $20,000. Or, he can rent the cart and pay $1 to the cart supplier each time he sells a pizza stick. What is his point of indifference? That is, at what volume of pizza sticks is he indifferent about renting or buying the cart? (Insert a number ONLY) 2. Like Link, Chrom sells pizza-on-a-stick at the beach. But Chrom also sells dogs-in-a-pocket, which are hot dogs you can carry with you that have enough preservatives to survive in your pocket for years. For each pizza-on-a-stick, Chrom incurs raw material costs of $5 and sells them for $10. He incurs material costs of $3 for the dogs and sells them for $5. He sells 3 times as many dogs as he…