Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longerthan the other. Gateway's discount rate is 11.1%. The company plans to continue with one of the two models for theforeseeable future. Based on the costs of each shown here:, which should it choose? (Note: dollar amounts arein thousands.)Based on the costs of each model, which should it choose? (Select the best choice below.)A. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller.B. Gateway Tours should choose Old Reliable because it lasts longer.O C. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller.D. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.Data table(Click on the following icon in order to copy its contents into a spreadsheet.)ModelYear 0Year 1Year 2 Year 3Year 4- $202- $3.8-$3.8- $3.8- $3.8Old ReliableShort andSweet- $100- $1.8-$1.8- $1.8- $1.8PrintDoneYear 5- $3.8Year 6- $3.8Year 7- $3.8

Net present value refers to the method of capital budgeting used for estimating the viability of the…

Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much long than the other. Gateway's discount rate is 11.1%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown here:, which should it choose? (Note: dollar amounts are in thousands.) Based on the costs of each model, which should it choose? (Select the best choice below.) O A. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. O B. Gateway Tours should choose Old Reliable because it lasts longer. OC. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. O D. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.

Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much long than the other. Gateway's discount rate is 11.1%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown here:, which should it choose? (Note: dollar amounts are in thousands.) Based on the costs of each model, which should it choose? (Select the best choice below.) O A. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. O B. Gateway Tours should choose Old Reliable because it lasts longer. OC. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. O D. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

See similar textbooks

Similar questions

Gateway Tours is choosing between two bus models, one of which lasts longer than the other. Gateway’s discount rate is 8%. It plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? For each of the two bus models, give the relevant cost that you would use for comparison purposes. [Note: to make it easier for you to solve this problem, I have already calculated the EAA for one of the buses, as you can see. You do not need to recalculate that one.] Model Year 0 Year 1 Year 2 Year 3 Year 4 Old Reliable 0 -15 -15 -15 -15 Short and Sweet -12 -12 -6 The relevant cost for Old Reliable is: A. -15.00 B. -49.68 C. -14.99 D. -15.01 E. -12.44 F. -15.10 G. -12.42 The relevant cost for Short and Sweet is: A. -15.70 B. -28.26 C. -15.87 D. -9.12 E. -15.84 F. -8.53 G.…
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is 10.8%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Year 0 Year 1 Year 5 - $4.2 Year 2 Year 3 - $4.2 - $2.1 Year 4 Year 6 Year 7 - $200 - $101 - $4.2 - $2.1 - $4.2 - $2.1 Old Reliable - $4.2 -$2.1 - $4.2 - $4.2 Short and Sweet Based on the costs of each model, which should it choose? (Select the best choice below.) O A. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. O B. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. OC. Gateway Tours should choose Old Reliable because it lasts longer. O D. Gateway Tours should choose Short and Sweet because the NPV of its costs…
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts two years longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the two models for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose? [Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.] Model Old R Year 0 $0 Year 1 -$29 Year 2 -$29 Year 3 Year 4 -$29 Year 5 -$29 -$29 Year 6 -$29 S & S $0 -$27 -$27 -$27 -$27 Which bus should Gateway Tours choose, and why? because $ is better than $ Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Your answer must take the form: "Choose B IUS Ix = = X₂ x² Insert Formula 14 !!! !!! H IM
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Its discount rate is 11.0%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Old Reliable Short and Sweet Year 0 -$200 -$100 Year 1 -$4.0 -$2.0 Year 2 -$4.0 -$2.0 Year 3 -$4.0 -$2.0 Year 4 -$4.0 -$2.0 Based on the costs of each model, which should it choose? (Select the best choice below) OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. OB. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. OC. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. D. Gateway Tours should choose Old Reliable because it lasts longer. Year 5 -$4.0 Year 6 -$4.0 Year 7 -$4.0
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Its discount rate is 10.8%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Old Reliable Short and Sweet Year 0 - $199 - $98 Year 1 - $3.9 -$2.1 Year 2 - $3.9 -$2.1 Year 3 -$3.9 -$2.1 Year 4 -$3.9 -$2.1 Year 5 -$3.9 Year 6 - $3.9 Year 7 - $3.9 Based on the costs of each model, which should it choose? (Select the best choice below.) OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. B. Gateway Tours should choose Old Reliable because it lasts longer. OC. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. OD. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.
A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
4. What is a Break-even Point and why do managers calculate it? 5. Branton Electric is considering the purchase of an entire cargo container filled with upgraded utility meters for $20,000. Branton can charge $50 for the installation of each upgraded meter, while the actual cost of the installation would be only $15. How many utility meter upgrades are necessary for Branton Electric to break even on this purchase? (Quick Start #16) 6. What are the advantages and disadvantages of using a conservative strategy of Capacity versus an Aggressive strategy?
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $23,500 to purchase and which will have OCF of −$3,100 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $32,000 to purchase and which will have OCF of −$1,600 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 11 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Scion EAC_____? Toyota EAC____?
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,000 to purchase and which will have OCF of −$650 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
The president of Midnight Rambler wants to know if he should allow Jack Flash to have the scooters for $120,000. Determine the effect on profits from accepting Jack Flash’s offer. Briefly explain why certain costs should be omitted from the analysis in requirement (a.) Assume Midnight Rambler is operating at capacity and could sell the 300 scooters at its regular markup: Determine the Opportunity Cost of accepting Jack Flash’s offer. Determine the effect on profits of accepting Jack Flash’s offer What other factors should Midnight Rambler consider before deciding to accept the special order?
1) A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 2, 6, and 3 respectively. MARR is 0.08 per year. D01 D02 OS FIRST COST, $ 138,000 962,000 АОС, $ SV, $ 113,000 70,000 138,000 36,000 352,000 a) Draw the cash flow for all of alternatives. b) Which alternative will be selected on the basis of PW calculation? Why? c) If OS increases 20% each year, which alternative will be more economical (PW method)? d) Which alternative will be selected if AW method is used?