About the exercise of the selection of the vehicle: model A costs 32,000 and Model B 28,000 interest rate L 5% the A depreciates 40% and the B depreciates 55% and the 4th year that is when you can sell it Which one costs more and how much? Model A, 1430 Model B, 4000 Model A, 1257 Model B1430 Model B, 1207 Model A 4000
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- Car A initially costs $500 more than Car B, but it consumes 0.04 gallon/mile versus 0.05 gallon/mile for B. Both vehicles last 8 years, and B’s salvage value (the value when it is traded in after 8 years) is $100 smaller than A’s. Fuel costs $2.40 per gallon. Other things being equal, at how many miles of use per year (X) is A preferred vs. B?A student is considering the purchase of two alternative cars. Car A initially costs $1,500 more than Car B, but uses 0.05 gallons per mile, versus 0.07 gallons per mile for Car B. Both cars will last for 10 years, and B’s market value is $800 less than A’s. Fuel costs $4.00 per gallon. If all else is equal, at how many miles driven per year does Car A become preferable to Car B? (a) 875 (b) 1,167 (c) 1,723 (d) 1,892Tamarack Aerospace is buying a used Cessna Citation CJ1 jet for $850,000 which they expect to fly for 3 years before it needs to be replaced. The Cessna’s annual operating cost is $10,000. If Tamarack’s required rate of return is 10%, what is the jet’s EAC? (Round your answer to whole dollars) a. $-346,221 b. $-357,221 c. $-351,798 d. $-353,565 e. $-331,432
- A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate 9% or 0.09, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A - B First Cost: $800 - $600 Annual Net Benefit: $130 - $230 Salvage Value: $40 - $20 Usefil Life (years): 9 - 3Xavier Co. wants to purchase a machine for $37,400 with a four-year life and a $1,100 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,400 in each of the four years. What is the machine's net present value? Periods Present Valueof $1 at 8% Present Value of anAnnuity of $1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121Thornton Painting Company is considering whether to purchase a new spray paint machine that costs $5,400. The machine is expected to save labor, increasing net income by $810 per year. The effective life of the machine is 15 years according to the manufacturer’s estimate. Required Determine the unadjusted rate of return based on the average cost of the investment. (Enter your answer as a whole percentage (e.g. 0.55 should be entered as 55).)
- A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: year 1: $50,000 year 2: $50,000 year 3: $50,000 year 4: $60,000 The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value (NPV)? A.) -7,890.99 B.) 7,899.99 C.) -8,667.61 D.) 9,100.51Solve the below given Problem with (a) 50% bonus depreciation and (b) 100% bonus depreciation. Henredon purchases a highprecision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. All dollar amounts are expressed in real dollars. Depreciation follows MACRS 7-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.9%. Solve, a. Determine the actual after-tax cash flows for each year. b. Determine the PW of the after-tax cash flows. c. Determine the AW of the after-tax cash flows. d. Determine the FW of the after-tax cash flows. e. Determine the combined IRR of the after-tax cash flows. f. Determine the combined ERR of the after-tax cash flows. g. Determine the real IRR of the after-tax cash flows. h. Determine the real ERR of the after-tax cash flows.Your company buys a piece of equipment for a cost of $225K including tires. Freight costs are $4K. Tire replacement costs $25K and lasts for 4000 hrs. The equipment has a total life of 10,000 hours and the plan is to use it 1000 hours per year. Fuel costs $2.35 per gallon and equipment usage is 5 galhr. The equipment will be used for 5 years and sold for $100K Company overhead and interest is 20%. Determine the total Ownership and operating cost. Select the right option with explanationbas options are: - 80$ - 81$ -82$ -83$ -84$ -85$ -86$ -87$ -88$ -89$ -90$