4-43. A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 2 mpg of gasoline. The extra cost of a CVT is $800 on the sticker price of a new car. For a particular model averaging 28 miles per gallon with the CVT, what is the cost of gasoline (dollars per gallon) that makes this option affordable when the buyer's interest rate is 10% per year? The car will be driven 100,000 miles uniformly over an eight-year period. (4.7)

4-43. A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 2 mpg of gasoline. The extra cost of a CVT is $800 on the sticker price of a new car. For a particular model averaging 28 miles per gallon with the CVT, what is the cost of gasoline (dollars per gallon) that makes this option affordable when the buyer's interest rate is 10% per year? The car will be driven 100,000 miles uniformly over an eight-year period. (4.7)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Toyota will bring hybrid electric automobiles to market next year priced at $32,000 (this includes a $8,000 federal tax credit). At $1.83 per gallon of gasoline, it will take 11 years to recoup the difference in price between a base model Toyota Camry and its four-cylinder gasoline-only counterpart. The price difference is $4,180. If the hybrid vehicle is driven for 16 years, what is the internal rate of return on the extra investment in the hybrid? The internal rate of return on the extra investment in the hybrid is%. (Round to one decimal place.)
A suburban taxi company is considering buying taxis with diesel engines instead of gasoline engines. The cars average 120,000 miles a year. Use EUAC to determine the more economical choice if interest rate is 5%. Diesel Gasoline Vehicle cost $ 24,000.00 $ 19,000.00 Useful life (in years) 5 4 Fuel cost per gallon $ 3.52 $ 3.68 Mileage per gallon 30 25 Annual repairs $ 900.00 $ 700.00 Annual insurance premium $1,000.00 $1,000.00 End of useful life resale value $ 4,000.00 $ 6,000.00 What is value of EUAC for diesel engine? What is the value of EUAC for gasoline engine?
Present value. A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car He says, "For only 5 annual payments of $2,800, this beautiful 1998 Honda Civic can be yours." If you can borrow money at 10%, what is the price of this car? Assume the payment is made at the end of each year. If you can borrow money at 10%, what is the price of this car? (Round to the nearest cent.)
(Table: Car Costs) The table shows the initial cost outlays of two versions of the Ford Escape and their estimated annual fuel costs. Stu is not sure whether he wants the hybrid or standard model. Although more expensive, the hybrid model has better gas mileage and would save $890 in gas per year. Assume both cars are worthless after six years. At a 7% interest rate, what should Stu do? ITT Costs if Hybrid Bought -$27,000 Costs if Standard Bought -$22,500 Year -2,000 -2,000 -2,890 -2,890 1 3 -2,000 -2,000 -2,000 -2,890 -2,890 -2,890 -2,890 4 6. -2,000 Buy the standard model, since the net present value of the total cost of the standard is more than that of the hybrid. Buy either model, since the net present value of the cost difference between the hybrid and the standard model is zero. Buy the standard, since the net present value of the total cost of the standard is less than that of the hybrid. Buy the hybrid, since the net present value of the total cost of the hybrid is less than…
3. A used car M costs $4,900.00 and operating costs are 11 cents per mile. At the end of 5 years you estimate its selling price to be $1,500.00. Another used car N costs $6,000.00 and operating costs are 9 cents per mile. At the end of 5 years you estimate the selling price to be $X. Assume you will be driving 15,000 miles per year. Determine the value of X so the two cars are equally worth to you at i=7%.
Present value. A smooth-talking used-car salesman who smiles considerably is offering you a great deal on a "pre-owned" car. He says, "For only 6 annual payments of $2,600, this beautiful 1998 Honda Civic can be yours." If you can borrow money at 10%, what is the price of this car? Assume the payment is made at the end of each year. If you can borrow money at 10%, what is the price of this car? $nothing (Round to the nearest cent.)
28) ABC Company wants to introduce a new laptop into the market. The estimated price of each laptop is RO 250. The required profit margin is 10% of sales. The target cost for the new laptop is: a. RO 255 b. RO 225 c. RO 275 d. RO 250
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Because of its age, your car costs $7,000 annually in maintenance expense. You could replace it with a newer vehicle costing $8,800 that would be expected to have a life of 8 years. If your opportunity cost of capital is 3%, by how much must maintenance expense decrease on the new vehicle to justify its purchase? $ Correct 1,253.62±1
Suppose you want to buy a Tesla Model S, the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multicoat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2010 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a…
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