Brad has someone interested in purchasing his existing boat for $80,000. He could use this cash as a deposit on the new boat which will cost him $225,000. His banker estimates the payments on the new boat will be about $1,500. The new boat is more fuel efficient and he believes he can cut his fuel costs by 10% but the more expensive boat will increase his insurance premium by 12%. He is also concerned that he will have to change to a larger boat slip which would increase his dock fees by 5%. The good thing about the new boat is that he should save on maintenance and repairs, at least for the first 3 years. The only other expense Brad would incur with the new boat is adding some additional fishing tackle and gear to accommodate larger parties that he estimates would cost him about $1,500. His fees for both the old and the new boat are as follows: Old Boat New Boat 4 hours $ 550 $ 600 6 hours $ 650 $ 700 Full Day (9 hours) $ 1,100 $ 1,200 Questions: 1. Which costs are relevant to Brad’s decision to purchase a new, larger boat? 2. If Brad decides to purchase a larger boat, what costs will be affected by this decision? Will they increase or decrease?

The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.

Your answer is partially correct. An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost $5,200 and it will cost $1,300 per year to operate at the end of year that follows. She will keep the vehicle for 5 years; at the end of this period, the upgraded vehicle will have a salvage value of $3,800. Alternatively, she could trade in her vehicle to lease a new vehicle. She estimates that her current vehicle has a trade-in value of $9,800 and that there will be $4,100 due at lease signing. She further estimates that it will cost $2,900 per year to lease and operate the vehicle. The independent contractor's MARR is 11%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective. Click here to access the TVM Factor Table Calculator. 1943.56 EUAC(keep): $…

Marcus Johnson has a life insurance policy that allows him to change his policy to fit his changing needs. He can change either the premium he pays or the period of coverage. What type of insurance does Marcus likely have? Multiple Choice Ordinary whole life Limited payment life Variable life Adjustable life Universal life E

Bruin Properties is in escrow to buy a 175,000 square foot shopping center in Camarillo, California for $35,000,000. Bruin Properties can borrow $24,000,000 fixed rate fully amortizing over 30 years at a 6.0% annual interest rate with equal monthly payments of principal and interest or it can borrow $28,000,000 fixed rate fully amortizing over 30 years at a 7.0% annual interest rate with equal monthly payments of principal and interest. What is the incremental annual borrowing cost for the additional $4,000,000 loan amount if each loan would be outstanding for the full 30 year term? a.13.0% b.12.4% c.11.5% d. 7.0%

A young computer engineer has $12,000 to invest and three different investment options (funds) to choose from. Type 1 guaranteed investment funds offer an expected rate of return of 7%, Type 2 mixed funds (part is guaranteed capital) have an expected rate of return of 8%, while an investment on the Stock Exchange involves an expected rate of return of 12%, but without guaranteed investment capital. Computer engineer has decided not to invest more than $2,000 on the Stock Exchange in order to minimize the risk. Moreover for tax reasons, she needs to invest at least three times more in guaranteed investment funds than in mixed funds. Assume that at the end of the year the returns are those expected; she is trying to determine the optimum investment amounts. (a) Express this problem as a linear programming model with two decision variables.(b) Solve the problem with the graphical solution procedure and define the optimum solution.

Donald Harris received a windfall and needs to invest it for tax reasons. He went to his brother-in-law, Joe Harris, who is a financial advisor. Joe prepared a matrix that illustrated the possible returns on investment for different investment strategies under different economic conditions. That matrix is given below. Donald Harris reads the Wall Drive Journal and came across an article that stated that the probability that there would be a major downturn would be 10%; the probability of a downturn would be 30%; the probability of an upturn would be 40%; and that the probability of a major upturn would be 20%. Based on these numbers, what investment strategy should Donald Harris adopt?   Future Air Traffic Strategies Major Downturn Downturn Upturn Major Upturn Contrarian 20% 10% 5% -15% Risk Averse 2% 4% 7% 10% Growth -10% -8% 13% 20% Aggressive -25% -20% 11% 35% Group of answer choices

Barbara Flynn sells papers at a newspaper stand for $0.40. The papers cost her $0.30, giving her a $0.10 profit on each one she sells. From past experience Barbara knows that: a) 20% of the time she sells 150 papers. b) 20% of the time she sells 200 papers. c) 30% of the time she sells 250 papers. d) 30% of the time she sells 300 papers. Assuming that Barbara believes the cost of a lost sale to be $0.05 and any unsold papers cost her $0.30 and she orders 250 papers. Use the following random numbers: 14, 4, 13, 9, and 25 for simulating Barbara's profit. (Note: Assume the random number interval begins at 01 and ends at 00.) Based on the given probability distribution and the order size, for the given random number Barbara's sales and profit are (enter your responses for sales as integers and round all profit responses to two decimal places): Random Number Sales Profit 14 4 13 9 25

You drive a 4 year old truck valued at $15,000.  You have a $70,000 personal automobile policy with $12,000 per-person medical payments coverage and both collision ($500 deductible) and comprehensive coverage.  Your neighbor drives a five-year old SUV valued at $10,000.  Your neighbor has a 25/50/15 automobile policy with $15,000 in medical payments coverage and both collision ($200 deductible)  Early one morning your neighbor was driving down the street while you were driving the opposite way to drop your friend off at her house and your neighbor swerved into your lane and struck your vehicle.  Below you will find the damage caused by the accident:Your Bodily Injury: $7,000Your Friend’s Bodily Injury: $25,000Your Car: $8,500Neighbor’s Bodily Injury: $3,000Neighbors Car: $9,000Using the information above, find the following:a) How much will your policy pay for your bodily injury? blank1 - Numeric Answer Please type your answer to submit b) How much will your policy pay for your…

Global Logistics needs to rent space for storing product for the next three years. The following information regarding the demand and spot price is available. Current demand for the product is 150,000. Historically, Global Logistics has required 1500 square feet to store 1500 units of the product. Demand for the product can go up by 20% with a probability of 0.7 or down by 20% with a probability of 0.3. Global Logistics can sign a three-year fixed lease to rent 150,000 square feet of space at $1.00 per square foot per year. The firm may also choose to obtain warehousing space on the spot market. The current spot market price is $1.20 per square foot per year. The spot price can go up by 10% with a probability of 0.8 and can decrease by 10% with a probability of 0.2. The firm receives a revenue of $1.22 for each unit of demand. a) Create a decision tree showing period 0, 1 and 2 for the scenario described above. b) Calculate the NPV for the option when the firm decides to sign a…