Jeff & Bezos is a fresh groceries delivery company. The company has access toborrowing funds at a pre-tax rate of 8 % per year. Jeff & Bezos pays income taxes using22 % tax rate.The company would like to start using high-speed low-altitude drones to deliver grocerypurchases directly to residential customers' backyards. The required fleet of dronescosts $7,500,000. The fleet of drones, due to their heavy usage, would have no salvagevalue in four years. If the company chooses to buy them, the drones would be losingtheir economic value following the three-year property class under the MACRSdepreciation method.Instead of buying the fleet of the drones, Jeff & Bezos is also contemplating leasingthem for an estimated pre-tax annual cost of $2,205,000 per year for four years from adifferent company, Nets & Flicks, that currently owns the required number of the drones.Jeff & Bezos' net advantage to leasing, a.k.a. NAL, equals(Do not roundintermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Ifyour answer is negative, don't forget to put the minus sign.)NAL

Cost of Buying Drones:Initial cost: $7,500,000MACRS depreciation over 4 years.Leasing Costs:Annual…

Answered: Jeff & Bezos is a fresh groceries…

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 company produces and sells athletic shoes for children. The costs associated with each pair of shoes are estimated to be $14 of variable costs and $5 of fixed costs. The shoes normally sell for $35 per pair. A local children’s athletic league has offered to buy 100 pairs of shoes for $19 each. The company has excess capacity. How much additional revenue would be earned if they accept the offer?
A company rents snow skis and transports customers to and from their ski trip at a local ski slope. The trip is priced at $20 per person and has a CM ratio of 40%. The company's fixed expenses are $84,000. Last year, sales were $400,000 and profit was $36,000. How many units need to be sold to break- even, and how many need to be sold to earn a profit of $42,000? Multiple Choice 4,500 and 5,250 6,000 and 8,143 14,000 and 21,000 10 500 and 15 750
Premium Corporation believes that there is a market for a portable electronic toothbrush that can be easily carried by business travelers. Premium's market research department has surveyed the features and prices of electronic brushes currently on the market. Based on this research, Premium believes that $75 would be about the right price. At this price, marketing believes that about 78,000 new portable brushes can be sold over the product's life cycle. It will cost about $1,170,000 to design and develop the portable brush. Premium has a target profit of 25% of sales. Requirement 1. Determine the total and unit target cost to manufacture, sell, distribute, and service the portable brushes. Requirement 1. Determine the total and unit target cost to manufacture, sell, distribute, and service the portable brushes. Begin by computing the total target cost to manufacture, sell, distribute, and service the portable brushes, then compute the unit target cost to manufacture, sell, distribute,…
29) Foamsoft sells customized boat shoes. Currently, it sells 16,850 pairs of shoes annually at an average price of $75 a pair. It is considering adding a lower-priced line of shoes which sell for $59 a pair. Foamsoft estimates it can sell 4,500 pairs of the lower-priced shoes but will sell 1,100 fewer pairs of the higher-priced shoes by doing so. What is the estimated value of the erosion cost that should be charged to the lower-priced shoe project?
Lim has already spent $30,700 to manufacture a hamster food product called Pet Health. Lim currently has 10,000 bags of Pet Health on hand that can be sold for $94,480. Alternatively, Lim can process it further into a different product, Premium Pet, at an additional cost of $6,350. If Lim processes further, the Premium Pet can be sold for $102,900. This would result in revenue of: Multiple Choice $102,900. $100,830. $8,420. $2,070. $6,350.
A dairy farmer has found that it costs $1.84 to produce each gallon of milk, and the daily fixed cost to maintain production is $345. If the farmer charges $3.29 per gallon of milk when he sells it to a large grocery store chain, how many gallons of milk does the farmer need to produce and sell to make a daily profit of $479? (Round your answer to the nearest whole number of gallons.) The farmer needs to produce and sell gallons of milk to make a daily profit of $479.
Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pre-tax rate of 8% per year. Jeff & Bezos pays income taxes using 22% tax rate. The company would like to start using high speed low-altitude drones to deliver grocery purchases directly to residential customers backyards. Doing so would bring the company pre-tax savings in the amount of $3.2 million each year. The required fleet of drones costs $8.3 million. If the company chooses to buy them, the drones would be losing their economic value following the straight-line depreciation method during a five year period. The fieet of drones, due to their heavy usage, would have no salvage value at the end. Instead of buying the fleet of the drones, Jeff & Bezos is also contemplating leasing the drones for a lease term that matches the drones" economic life. It would lease them from a different company, Nets & Flicks, that currently owns the required number of the drones. The…
This morning I ordered my standard coffee refill from the Global Cafe for $1.09 (it is a lot cheaper if you are bringing your own cup). Before tax, a Venti Carmel Machiatto cost $4.95. Let's call the difference between the two $4. Assume that you buy coffees every week during the 52 week year. If you drop down from the Carmel Machiatto to a basic coffee, save $4 each time, and invest that $4 in an account that returns 5% per year, how much will you have in your account after 31 years? Do this on a monthly basis ($4 * 5 * 4 = $80) . (REMEMBER: YOU WILL HAVE TO TAKE r/12 TO GET YOUR MONTHLY INTEREST RATE).
Winnebagel Corp. currently sells 25,544 motor homes per year at $59,558 each, and 8,375 luxury motor coaches per year at $115,975 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 20,619 of these campers per year at $20,526 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 7,988 units per year, and reduce the sales of its motor coaches by 504 units per year. What is the amount to use as the annual sales figure when evaluating this project?

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