9-4. A vehicle costs $30,000 and incurs maintenance costs.increasing by $500 annually, starting at $1,000 in year one.When is it economical to replace it, assuming no salvagevalue? Use a MARR = 8% per year.

Answered: 9-4. A vehicle costs $30,000 and incurs…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 7E

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Similar questions

What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If that issue affected resale value at year 5, would that affect perceived value-in-use? How exactly?
A firm has the opportunity to invest in a project having an initial outlay of $20,000. Net cash inflows (before depreciation and taxes) are expected to be $5,000 per year for five years. The firm uses the straight-line depreciation method with a zero salvage value and has a (marginal) income tax rate of 40 percent. The firms cost of capital is 12 percent. Compute the IRR and the NPV. Should the firm accept or reject the project?
Metropolitan Hospital has estimated its average monthly bed needs as N=1,000+9X where X=timeperiod(months);January2002=0 N=monthlybedneeds Assume that no new hospital additions are expected in the area in the foreseeable future. The following monthly seasonal adjustment factors have been estimated, using data from the past five years: Forecast Metropolitans bed demand for January, April, July, November, and December 2007. If the following actual and forecast values for June bed demands have been recorded, what seasonal adjustment factor would you recommend be used in making future June forecasts?
What is deflation?
The Questor Corporation has experienced the following sales pattern over a 10-year period: Compute the equation of a trend line (similar to Equation 5.4) for these sales data to forecast sales for the next year. (Let 2004=0,2005=1, etc., for the time variable.) What does this equation forecast for sales in the year 2014? Use a first-order exponential smoothing model with a w of 0.9 to forecast sales for the year 2014.
Bell Greenhouses has estimated its monthly demand for potting soil to be the following: N=400+4X where N=monthlydemandforbagsofpottingsoil X=timeperiodsinmonths(March2006=0) Assume this trend factor is expected to remain stable in the foreseeable future. The following table contains the monthly seasonal adjustment factors, which have been estimated using actual sales data from the past five years: Forecast Bell Greenhouses demand for potting soil in March, June, August, and December 2007. If the following table shows the forecasted and actual potting soil sales by Bell Greenhouses for April in five different years, determine the seasonal adjustment factor to be used in making an April 2008 forecast.
Logarithms are especially useful for comparing series with two divergent scales since 10 percent growth always looks the same, regardless of the starting level. When absolute levels matter, the raw data are more appropriate, but when growth rates are whats important, log scales are better.
Compute the inflation rate for fruit prices from 2001 to 2004.
With in 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a graph to show the data.

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9-4. A vehicle costs $30,000 and incurs maintenance costs. increasing by $500 annually, starting at $1,000 in year one. When is it economical to replace it, assuming no salvage value? Use a MARR = 8% per year.