Homework iSaved1HelpSave & ExitSubCheck my wrlRoadrunner Freight Company owns a truck that cost $42,000. Currently, the truck's book value is $24,000, and its expected remaininguseful life is four years. Roadrunner has the opportunity to purchase for $31,200 a replacement truck that is extremely fuel efficient.Fuel cost for the old truck is expected to be $6,000 per year more than fuel cost for the new truck. The old truck is paid for but, inspite of being in good condition, can be sold for only $14,400.RequiredCalculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficient model, or should it continue touse the old truck until it wears out?Replace withNewKeep OldTotal relevant costsShould Roadrunner replace or continue the old truck?Prev7 of 7Next

Relevant costs: Relevant costs are the costs that are relevant for any decision making. Relevant…

Answered: Calculate the total relevant costs.…

Calculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

ANSWER IS 30,018. PLEASE SHOW YOUR SOLUTION MANUALLY :(((( don't use excel or financiaal calculator please Pachyderm Moving is reviewing data related to a new moving truck proposal. The new truck will cost $120,000 and have a five-year useful life. Management estimates that at the end of its useful life, the new truck will be sold for its salvage value of $10,000. Pachyderm expects that the annual net after-tax cash savings will be constant in each of the five years. What is the minimum amount of after-tax annual cash savings needed to make the investment yield a 10% return?
Q1: To meet increased sales, a large dairy is planning to purchase 5 new delivery Cars. Each truck will cost $ 5500 and has a depreciable salvage value of $ 500 at the end of its 5-year useful life. Required: Compute the depreciation schedule and book value of the tractor using straight-line (SL), sum of years’ digits (SOYD), and double declining balance (DDB) depreciation schedules if the recovery period is 5 years.
Plz use excel and show formula !!!!!!! Benson Enterprises is deciding when to replace its old machine. The machine’s current salvagevalue is $1.2 million. Its current book value is $1 million. If not sold, the old machine will requiremaintenance costs of $420,000 at the end of the year for the next five years. Depreciation on theold machine is $200,000 per year. At the end of five years, it will have a salvage value of $220,000.A replacement machine costs $3.5 million now and requires maintenance costs of $160,000 at theend of each year during its economic life of five years. At the end of five years, the new machinewill have a salvage value of $540,000. It will be fully depreciated using the three-year MACRSschedule. In five years a replacement machine will cost $4,000,000. Pilot will need to purchasethis machine regardless of what choice it makes today. The corporate tax is 35 percent and theappropriate discount rate is 10 percent. The company is assumed to earn sufficient revenues…
Roadrunner Freight Company owns a truck that cost $42,000. Currently, the truck’s book value is $24,000, and its expected remaining useful life is four years. Roadrunner has the opportunity to purchase for $31,200 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $6,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $14,400.Calculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficientmodel, or should it continue to use the old truck until it wears out? Keep Old Replace with New Total Relevant Cost
Roadrunner Freight Company owns a truck that cost $42,000. Currently, the truck’s book value is $24,000, and its expected remaining useful life is four years. Roadrunner has the opportunity to purchase for $31,200 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $6,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $14,400.RequiredCalculate the total relevant costs. Should Roadrunner replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?
Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $30,000 per year. Nancy can buy a used truck for $10,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,000. Nancy’s MARR is 24%/year. Solve, a. What is the present worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on present worth? c. Should Nancy buy the truck?
Benson Freight Company owns a truck that cost $47,000. Currently, the truck’s book value is $22,000, and its expected remaining useful life is five years. Benson has the opportunity to purchase for $30,300 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $7,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $19,000.RequiredCalculate the total relevant costs. Should Benson replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?
kau.5 Healthy Practices Hospital purchases $300,000 of testing equipment that has a useful life of 5 years. The hopsital also pays $20,000 to install the equipment and make it useable. The hopsital also expects that after 5 years, it can sell the equipment for $10,000. Calculate the 5 years of depreciation using straight line, double declining balance, and sum-of-the-years digits IN EXCEL.
2. Foxx Company manufactures water sealant. This sealant is used to stop leaks in basement orin concrete retainer walls. In 2019 the company sold 1.6M gallons of sealant at price of P3.00per gallon with a variable cost per gallon of P1.50. The fixed costs were P1,550,000In 2020, new automated equipment will be used in production. This will increase fixed costsfor the year to P1,785,000. The variable cost per gallon has been estimated at P1.30 per gallon.The sales volume increased by 15% percent in 2020.Required:1. For 2019 compute the BEP in gallons and pesos.2. For 2020 compute the BEP in gallons and pesos.3. How much is the EBIT for 2019 & 20204.Using the cost and revenue data for 2019 consider each of the following situationsindependently:a. What is the effect on the break even point (in gallons) for the decrease in variable cost fromP1.50 to P1.30?b. What is the effect on the break even point for the increase in fixed costs of P235,000?
SABIC purchased a machine for SA 120,000. The machine can be used for two years with salvage value of SR 20,000. The machine will be used for 4000 hours in the first year and 3000 hours in the second year. The saving in the operating cost is expected to be SA 90,000 in the first year and SR 70,000 in the second year. SABICS MARR s 12%. What is the equivalent saving per hour? SR 4.59 SA 3.14 O SR 4.83 SR 5.38
H5. Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five-year life. At the end of five years, it is believed that the machine could be sold for $15,000. The current machine being used was purchased 2 years ago at a cost of $40,000 and it is being depreciated down to zero over its 5-year life. The current machine's salvage value now is $18,000. Also, a higher level of inventory would be needed in the amount of $4000 for the new machine. The new machine would increase EBDT by $48,000 annually. Builtrite's marginal tax rate is 34%. What is the Initial Investment associated with the purchase of this machine? O $43,960 O $53,360 O $48,040 • $50,640
1) A manufacturing plant manager has purchased a new bologna slicing machine for $24,500. The new machine is expected to produce an extra $8,000 of revenue and have an annual operating expense of $3,000. If the useful life is expected at 6 years and i = 7% per year, what is the PW? Select one: a. $35000 b. $23835 c. $ 25000 d. $50000