5. Problem 5The purchase of a used pickup truck for $9,000 is being considered. Fuel and maintenance costs are$1,980 per year if the truck is driven 16,000 kilometers, and vary directly with mileage. Assume youwill keep and use the truck for 5 years. The salvage value after five years of use decreases (from theoriginal purchase price) by $0.05 per kilometer driven during that entire period.(a) Find the equivalent uniform annual cost, rounded to the nearest dollar, if the interest rate is 8%.(b) If the annual mileage is instead 24,000 km, what would the EUAC be?(c) If the annual mileage is instead 8,000 km, what would the EUAC be?

EUAC is the is equivalent uniform annual cost which is necessary to cover all cost involved in that…

The purchase of a used pickup truck for $9,000 is being considered. Fuel and maintenance $1,980 per year if the truck is driven 16,000 kilometers, and vary directly with mileage. Asu vill keep and use the truck for 5 years. The salvage value after five years of use decreases (f original purchase price) by $0.05 per kilometer driven during that entire period. a) Find the equivalent uniform annual cost, rounded to the nearest dollar, if the interest ra b) If the annual mileage is instead 24,000 km, what would the EUAC be? c) If the annual mileage is instead 8,000 km, what would the EUAC be?

The purchase of a used pickup truck for $9,000 is being considered. Fuel and maintenance $1,980 per year if the truck is driven 16,000 kilometers, and vary directly with mileage. Asu vill keep and use the truck for 5 years. The salvage value after five years of use decreases (f original purchase price) by $0.05 per kilometer driven during that entire period. a) Find the equivalent uniform annual cost, rounded to the nearest dollar, if the interest ra b) If the annual mileage is instead 24,000 km, what would the EUAC be? c) If the annual mileage is instead 8,000 km, what would the EUAC be?

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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A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available. Gasoline $31,000 3 years $8,000 $0.41 Initial investment Useful life Salvage value Operating cost per mile a. With interest at 4% per year, determine the annual mileage at which the two trucks are equivalent. . For 17,000 miles per year in travel, which truck should be recommended? Click the icon to view the interest and annuity table for discrete compounding when /-4% per year. The annual mileage at which the two trucks are equivalent is miles. (Round to the nearest whole number) Diesel $23,000 2 years $5,000 $0.33
1. Peach Co. is considering purchasing a new tractor to harvest their premium catnip. The new tractor would cost $646,100 and have a useful life of 14 years and no salvage value. The tractor would allow more catnip to be harvested and increase sales revenue by $276,000 per year and operating expenses by $170,150 per year, including depreciation expenses from the tractor. What is the accounting rate of return? Round your answer to 2 d.p. as a percent. For example, if you believe the answer is 10.71%, enter 10.71 2. Peach Co. spends $250,000 for a new catnip sorting machine. Peach Co. expects net cash inflows of $20,000 in the first year, $50,000 in the second year, and $25,000 over the following 10 years. What is the payback period? Round your answer to 2 d.p.
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A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available Gasoline $28,000 Initial investment Useful life Salvage value Operating cost per mile a. With interest at 6% per year, determine the annual mileage at which the two trucks are equivalent b. For 15,000 miles per year in travel, which truck should be recommended? Click the icon to view the interest and annuity table for discrete compounding when/=6% per year 5 years $8,000 $0.47 a. The annual mileage at which the two trucks are equivalent is smiles (Round to the nearest whole number). Diesel $22,000 4 years $4,000 $0.39
1. Peach Co. is considering purchasing a new tractor to harvest their premium catnip. The new tractor would cost $646,100 and have a useful life of 14 years and no salvage value. The tractor would allow more catnip to be harvested and increase sales revenue by $276,000 per year and operating expenses by $170,150 per year, including depreciation expense from the tractor. What is the accounting rate of return? Round your answer to 2 d.p. as a percent. For example, if you believe the answer is 10.71%, enter 10.71 2. Peach Co. spends $250,000 for a new catnip sorting machine. Peach Co. expects net cash inflows of $20,000 in the first year, $50,000 in the second year, and $25,000 over the following 10 years. What is the payback period? Round your answer to 2 d.p.
Baird Rentals can purchase a van that costs $110,000; it has an expected useful life of five years and no salvage value. Baird uses straight-line depreciation. Expected revenue is $40,425 per year. Assume that depreciation is the only expense associated with this Investment. Required a. Determine the payback period. Note: Round your answer to 1 decimal place. b. Determine the unadjusted rate of return based on the average cost of the investment. Note: Round your answer to 1 decimal place. (l.e., .234 should be entered as 23.4). a. Payback period b. Unadjusted rate of return years %
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Question 1) Nascar Company has two alternatives for a new truck investment: Buy or lease. Buying option: The purchasing cost of the truck is 230.000 dollars. The economic life will be five years and at the end fifth year the truck will have a salvage value, 40.000 dollars Repair and insurance costs: 1.year 10.000 dollars 2.year 15.000 3.year 20.000 4.year 25.000 5.year 28.000 Leasing option: Lease period: 5 years Annual lease payments: 60.000 dollars (payments will be made at the beginning of each year) Also, at the beginning of contract period Nascar Co. must pay a deposit, 20.000 dollars. This deposit amount will be refunded at the end of fifth year. According to the leasing contract all repair and insurance expenses are under the responsibility of leasing company. Make your decision according to Net Present Value Method. (Assume the discount rate of the company is 12%) Present value of 1 dollar Period Discount rate (12%) 1 0,893 2 0,797 3…

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