A firm can lease a truck for 4 years at a cost of $38,000 annually. It can instead buy a truck at a cost of $88,000, with annualmaintenance expenses of $18,000. The truck will be sold at the end of 4 years for $28,000.a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 16%?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Equivalent annual costIb. Which is the better option?LeaseBuy

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Answered: A firm can lease a truck for 4 years at…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A construction company can purchase a used backhoe for $90,000 and spend $450 per day in operating costs. The equipment will have a 5 -year life then sell it at salvage for $3,000. Alternatively, the company can lease the equipment for $800 per day. How many days per year must the company use the equipment in order to justify its purchase at an interest rate of 6% per year.
The price of a new car is $36,000, Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 7%/year compounded monthly. (Round your answers to the nearest cent.) (a) What monthly payment will she be required to make if the car is financed over a period of 24 months? Over a period of 48 months? 24 months $ 48 months (b) What will the interest charges be if she elects the 24-month plan? The 48-month plan? 24-month plan 48-month plan
XYZ Construction Inc. wants to purchase a new pick-up truck. The price for the new truck is $43, 688. The dealer allows XYZ to trade - in the old truck for $5,224. XYZ can payback the remaining balance through a 4-year payment plan. Given the agreed interest rate is 3%: How much is the monthly payment?
Elijah Enterprises will need to upgrade the computer system in 4 years. They anticipate the upgrade to cost $105,300. If the discount rate is 13%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar. Future Value / (1+R)^n = Amount Required / = What would be required if the discount rate was 8%? Future Value / (1+R)^n = Amount Required / =
Deutsche Transport can lease a truck for four years at a cost of €38,000 annually. It can instead buy a truck at a cost of €88,000, with annual maintenance expenses of €18,000. The truck will be sold at the end of four years for €24,500. Ignore taxes. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%? Note: Do not round intermediate calculations. Enter your answer in euros. Round your answer to the nearest whole number. b. Which is the better option: leasing or buying? a. Equivalent annual cost b. Better option
What is the profitability index of a project that costs $10,000 and provides cash flows of $3,200 in years 1 and 2 and $5,200 in years 3 and 4? The discount rate is 8%. Note: Do not round intermediate calculations. Round your answer to 4 decimal places. Please answer fast I give upvote.
Cullumber Excavating Inc. is purchasing a bulldozer. The equipment has a price of $99,800. The manufacturer has offered a payment plan that would allow Cullumber to make 10 equal annual payments of $19,900.00, with the fırst payment due one year after the purchase. How much total interest will Cullumber pay on this payment plan? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Total interest $4
es A forklift will last for only 4 more years. It costs $6,900 a year to maintain. For $24,000 you can buy a new lift that can last for 12 years and should require maintenance costs of only $3,900 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 5% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 13% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Should you replace the forklift? a-1. Equivalent cost a-2. Should you replace the forklift? b-1. Equivalent cost b-2. Should you replace the forklift?
Not sure what the table factor would be
You have saved $3,000 for a down payment on a new car. The largest monthly payment you can afford is $450. The loan will have a 6% APR based on end-of-month payments. What is the most expensive car you can afford if you finance it for 48 months? For 60 months? Do not round intermediate calculations. Round your answers to the nearest cent. Financed for 48 months: $ Financed for 60 months: $
The price of a new car is $36,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 9% / year compounded monthly. (Round your answers to the nearest cent.) (a) What monthly payment will she be required to make if the car is financed over a period of 36 months? Over a period of 72 months? 36 months. $ 72 months $ (b) What will the interest charges be if she elects the 36-month plan? The 72-month plan? 36-month plan $ 72-month plan $
Elijah Enterprises will need to upgrade the computer system in 5 years. They anticipate the upgrade to cost $98,900. If the discount rate is 15%, what will be the required yearly investment needed to obtain the money for the upgrade?Round your (1+R)^n value to 2 decimal places and use that number for your final amount required rounded to the nearest dollar.

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