A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment (dollars) if the money factor is 0.0022. Assume that the residual value is 54% of the HSRP of $48.900 and there is no trade-in. (Round your answer to the nearest cent.)$Need Help?

Data given: Negotiated Price=$ 44250 Down payment = 20% of negotiated price Money factor=0.0022…

A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monovy lease payment (n dollars) if the money factor is 0.0022. Assume that the residual value is 54% of the HSRP of $48.900 and there is no trade-in (Round your answer to the nearest cent) Need Help?

A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monovy lease payment (n dollars) if the money factor is 0.0022. Assume that the residual value is 54% of the HSRP of $48.900 and there is no trade-in (Round your answer to the nearest cent) Need Help?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9P

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Amy Lloyd is interested in leasing a new Honda and has contacted three automobile dealers for pricing information. Each dealer offered Amy a closed-end 36-month lease with no down payment due at the time of signing. Each lease includes a monthly charge and a mileage allowance. Additional miles receive a surcharge on a per-mile basis. The monthly lease cost, the mileage allowance, and the cost for additional miles follow: Amy decided to choose the lease option that will minimize her total 36-month cost. The difficulty is that Amy is not sure how many miles she will drive over the next three years. For purposes of this decision, she believes it is reasonable to assume that she will drive 12,000 miles per year, 15,000 miles per year, or 18,000 miles per year. With this assumption Amy estimated her total costs for the three lease options. For example, she figures that the Hepburn Honda lease will cost her 36(299) + 0.15(36,000 36,000) = 10,764 if she drives 12,000 miles per year, 36(299) + 0.15(45,000 36,000) = 12,114 if she drives 15,000 miles per year, or 36(299) + 0.15(54.000 36,000) = 13,464 if she drives 18,000 miles per year. a. What is the decision, and what is the chance event? b. Construct a payoff table for Amys problem. c. If Amy has no idea which of the three mileage assumptions is most appropriate, what is the recommended decision (leasing option) using the optimistic, conservative, and minimax regret approaches? d. Suppose that the probabilities that Amy drives 12,000, 15,000, and 18,000 miles per year are 0.5, 0.4, and 0.1, respectively. What option should Amy choose using the expected value approach? e. Develop a risk profile for the decision selected in part (d). What is the most likely cost, and what is its probability? f. Suppose that, after further consideration, Amy concludes that the probabilities that she will drive 12,000, 15,000, and 18,000 miles per year are 0.3, 0.4, and 0.3, respectively. What decision should Amy make using the expected value approach?
Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the price at 4,000 per month, which is the normal stand-alone price that Yankee charges. After 16 months, Yankee and Albany agree to modify the contract. Yankee reduces the fee for the 8 remaining months to 3,800 per month, and Albany agrees to a 24-month extension at a cost of 3,600 per month. At the time that the contract is modified, Yankee is charging other customers 3,750 per month for the coaching service. Should Yankee and Albany treat the modification as a separate contract?
Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.
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A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment (in dollars) if the money factor is 0.0026. Assume that the residual value is 52% of the MSRP of $48,900 and there is no trade-in. Round you answer to te nearest cent. $?
A marketing manager leases a car for 24 months after agreeing to a negotiated price of $44,250 and makes a down payment that is 20% of the negotiated price. Find the monthly lease payment (in dollars) if the money factor is 0.0021. Assume that the residual value is 54% of the MSRP of $48,900 and there is no trade-in. (Round your answer to the nearest cent.
A real estate broker decides to lease a car for 36 months. Suppose the annual interest rate is 7.8%, the negotiated price is $49,000, there is no trade-in, and the down payment is $4,000. Find the monthly lease payment (in dollars). Assume that the residual value is 49% of the MSRP of $51,5000. Round your answer to the nearest cent.
A real estate broker decides to lease a car for 36 months. Suppose the annual interest rate is 7.8%, the negotiated price is $48,000, there is no trade-in, and the down payment is $3,000. Find the monthly lease payment (in dollars). Assume that the residual value is 48% of the MSRP of $51,800.
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General Motors advertised three alternatives for a 25-month lease on a new Tahoe: (1) zero dollars down and a lease payment of $1,750 per month for 25 months, (2) $5,000 down and $1,500 per month for 25 months, or (3) $38,500 down and no payments for 25 months. Use the present value Table B.3 in Appendix B to determine which is the best alternative for the customer (assume you have enough cash to accept any alternative and the annual interest rate is 12% compounded monthly).
The store will sell specialty cupcakes for $5 per cupcake (each cupcake has a variable cost of $1.) The company is negotiating its lease for the new store. The landlord has offered two leasing options: 1) a lease of $3,500 per month; or 2) a monthly lease cost of $1,500 plus 8% of the company's monthly sales revenue. Requirements 1. If the Factory plans to sell $4,500 cupcakes a month, which lease option would cost less each month? Why? 2. If the company plans to sell 7,000 cupcakes a month, which lease option would be more attractive? Why? Requirement 1. If the Factory plans to sell cupcakes a month, which lease option would cost less each month? Why? Begin by calculating the indifference point. Select the equation to determine the indifference point. (Abbreviations used: FC = Fixed costs, VCU = Variable costs per unit) (VCU (option 1) × Units) + FC (option 1) = (VCU (option 2) × Units) + FC (option 2) The indifference point (in number of cupcakes) is