Please do not give solution in image format thanku The operations manager for a local bus company wants to decide whether heshould purchase a small, medium, or large new bus for his company. He estimatesthat the annual profits (in $000) will vary depending upon whether passengerdemand is low, medium, or high, as follows:BusSmallMediumLargesmallDEMANDLOW504020mediumIf he uses the Laplace criterion, which size bus will he decide to purchase?MEDIUM608050largeeither small or mediumeither medium or largeHIGH7090120,

The Laplace criterion uses the best payoff average to find the best alternative.Laplace criterion…

Answered: If he uses the Laplace criterion, which…

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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The president of Midnight Rambler wants to know if he should allow Jack Flash to have the scooters for $120,000. Determine the effect on profits from accepting Jack Flash’s offer. Briefly explain why certain costs should be omitted from the analysis in requirement (a.) Assume Midnight Rambler is operating at capacity and could sell the 300 scooters at its regular markup: Determine the Opportunity Cost of accepting Jack Flash’s offer. Determine the effect on profits of accepting Jack Flash’s offer What other factors should Midnight Rambler consider before deciding to accept the special order?
Gateway Tours is choosing between two bus models, one of which lasts longer than the other. Gateway’s discount rate is 8%. It 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? For each of the two bus models, give the relevant cost that you would use for comparison purposes. [Note: to make it easier for you to solve this problem, I have already calculated the EAA for one of the buses, as you can see. You do not need to recalculate that one.] Model Year 0 Year 1 Year 2 Year 3 Year 4 Old Reliable 0 -15 -15 -15 -15 Short and Sweet -12 -12 -6 The relevant cost for Old Reliable is: A. -15.00 B. -49.68 C. -14.99 D. -15.01 E. -12.44 F. -15.10 G. -12.42 The relevant cost for Short and Sweet is: A. -15.70 B. -28.26 C. -15.87 D. -9.12 E. -15.84 F. -8.53 G.…
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is 11.1%. The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown here:, which should it choose? (Note: dollar amounts are in thousands.) Based on the costs of each model, which should it choose? (Select the best choice below.) A. 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. O C. Gateway Tours should choose Short and Sweet because the equivalent annual annuity of its costs is smaller. D. Gateway Tours should choose Old Reliable because the equivalent annual annuity of its costs is smaller. Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Model Year 0 Year 1 Year 2 Year 3 Year 4 - $202 - $3.8 -$3.8 - $3.8 - $3.8 Old…
a retailer wants to add a line of bike carriers to his sports department and plans to sell one model at $39.99. If he can buy a good product for $32.50 less 20%, will he be able to get his usual markup of 42% on the selling price and sell the carrier at the price he set?
1) A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 2, 6, and 3 respectively. MARR is 0.08 per year. D01 D02 OS FIRST COST, $ 138,000 962,000 АОС, $ SV, $ 113,000 70,000 138,000 36,000 352,000 a) Draw the cash flow for all of alternatives. b) Which alternative will be selected on the basis of PW calculation? Why? c) If OS increases 20% each year, which alternative will be more economical (PW method)? d) Which alternative will be selected if AW method is used?
Assume that you desire to operate a food truck business. You have five food trucks. Some trucks will need more repairs than others. Based on online research and discussions with other food truck owners, you determine that in a given year the following possibilities are likely. The probability of few repairs is 20% and the estimated cost is $2,500 The probability of moderate repairs is 60% with an estimated cost of $5,000 The probability of extensive repairs is 20% with an estimated cost of $25,000. What is the average expected cash flow out for repairs, based on these probabilities? Type your answer without commas or decimal places or dollar signs.
A business that will open a gift shop in Los Angeles is considering making and selling love-themed magnets. It is thought that it will not be possible to order new magnets during the fair period, and magnets that are not sold during the fair period will not be sold later. A box of magnets costs the business $100 and generates $460 from its sale. The table includes predictions about demand probabilities.a-) What is the overstocking cost of the business in dollars/box?
Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000. Q. Calculate Tate’s and Booth’s respective share of fees using the Shapley value method
Calculate the number of package tours that must be sold to break even.The general manager at Lifetime Escapes proposes to increase the price of the package tour to $8,200 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the general manager consider before deciding to increase the price of the package tour?
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Skiable Acres operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Click the icon to view the information.) Read the requirements. Requirement 1. If Skiable Acres cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Complete the following table to calculate Skiable Acres' projected income. Revenue at market price Less: Total costs Operating income

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