Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lastsmuch longer than the other. Its discount rate is 10.8%. The company plans to continue with one of the two models forthe foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts arein thousands.)ModelOld ReliableShort and SweetYear 0- $199- $98Year 1- $3.9-$2.1Year 2- $3.9-$2.1Year 3-$3.9-$2.1Year 4-$3.9-$2.1Year 5-$3.9Year 6- $3.9Year 7- $3.9Based on the costs of each model, which should it choose? (Select the best choice below.)OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller.B. Gateway Tours should choose Old Reliable because it lasts longer.OC. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller.OD. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller.

Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…

Answered: Gateway Tours is choosing between two…

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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View Policies Show Attempt History Current Attempt in Progress Your answer is incorrect. Cullumber's Candles will be producing a new line of dripless candles in the coming years and has the choice of producing the candles in a large factory with a small number of workers or a small factory with a large number of workers. Each candle will be sold for $10. If the large factory is chosen, the cost per unit to produce each candle will be $3.60. The cost per unit will be $7.50 in the small factory. The large factory would have fixed cash costs of $2.30 million and a depreciation expense of $300,000 per year, while those expenses would be $470,000 and $100,000, respectively, in the small factory. Calculate the pretax operating cash flow break-even point for both factory choices for Cullumber's Candles. (Round answers to nearest whole units e.g. 152.) pretax operating cash flow breakeven point for the large factory is units and for the small factory is eTextbook and Media Save for Later Last…
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Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Its discount rate is 11.0%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.) Model Old Reliable Short and Sweet Year 0 -$200 -$100 Year 1 -$4.0 -$2.0 Year 2 -$4.0 -$2.0 Year 3 -$4.0 -$2.0 Year 4 -$4.0 -$2.0 Based on the costs of each model, which should it choose? (Select the best choice below) OA. Gateway Tours should choose Short and Sweet because the NPV of its costs is smaller. OB. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. OC. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. D. Gateway Tours should choose Old Reliable because it lasts longer. Year 5 -$4.0 Year 6 -$4.0 Year 7 -$4.0
Help Save & Ex Aunt Sally's "New Orleans Most Famous Pralines" sells pralines costing $1.09 each to make. If Aunt Sally's wants a 35% markup based on selling price and produces 30 pralines with an anticipated 11% spoilage, what should each praline be sold for? Note: Use your unrounded "number of units available for sale" value (after accounting for spoilage). Round your answer to the nearest cent. Selling price
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