John's 8-year-old Chevrolet Trail Blazer requires repairs estimated at $11,000 to make it road-worthy again. His wife, Sherry, suggested that he should buy a 5-year-old used Jeep GrandCherokee instead for $11,000 cash. Sherry estimated the following costs for the two cars:Trail Blazer Grand CherokeenRepairsAcquisition cost$30,000$11,000Annual operating costs:(Gas, maintenance, insurance)$2480What should John do? What are his savings in the first year?O a. Buy the Grand Cherokee; $480.O b.Fix the Trail Blazer; $5,980.O c.Fix the Trail Blazer; $9,813.O d.Buy the Grand Cherokee; $13,000.$11,000$2000

Here's a detailed calculation for better understanding. For the TrailBlazer:Repairs: $11,000Annual…

Answered: John's 8-year-old Chevrolet Trail…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Payash Freight Company owns a truck that cost $31,000. Currently, the truck's book value is $23,000, and its expected remaining useful life is four years. Payash has the opportunity to purchase for $24,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,900 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $14,000. Required Calculate the total relevant costs. Should payash replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?
Your company is considering the purchase of a new 623K Wheel Tractor-Scraper. Use the following information to calculate the hourly owning costs, hourly operating costs, and total owning and operating costs. - Delivered price (with tires): $420,000 - Cost of Tires: $30,000 and their life is determined by the average operation in zone B. - Salvage value is zero - the equipment is new and it is anticipated to be used for 5 years, until end of its service life. - Anticipated operating hours per year: 2,000 hrs/yr - Simple interest rate for purchase loan: 12% - Annual cost of Insurance: $5,500 (See optional method) - Property tax rate: 2% - Fuel use will be average value in medium range - Cost of fuel: $3.10 per gallon - Hourly Maintenance Cost: $5.00 per hour - Repair cost: $11.00 per hour - Operator cost (with fringes): $75 per hour - No undercarriage or special wear items costs…
1. The Luna Corporation is trying to decide if they should purchase a Truck for hauling material which costs $625,400. The Truck will require $30,600 of working capital and major maintenance in years 3, year 5, and year 7. The major maintenance will cost $50,000 in years 3 and 5 and $65,000 in years 7. The truck will increase the net income by $185,750 in years 1 through 4, and $91,250 in years 5 through 7. At the end of year 7, the company expects to sell the truck for 5% of the cost that they paid for it. Calculate the net present value of the Truck using a 10% rate of return. Show your work and indicate if the Luna Corporation should purchase the Truck. PLEASE PUT IN SIMPLEST FORM
Next Kristen Lu purchase a used automobile for $8,000 at the beginning of last year and incurred the following operating costs: Depreciation ($8,000 ÷ 5 years) Insurance Garage rent Automobile tax and license Variable operating cost $1,600 $1,200 $360 $40 $0.14 per mile The variable operating cost consists of gasoline, oil, tires, mainance, and repairs. Kristen estimates, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $1,600. The car is kept in a garage for a monthly fee. Required: 1. Kristen drove the car 10,000 miles last year. Compute the average cost per mile of owning and operating the car. 2. Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? Explain. Page 590 3. Kristen is thinking about buying an expensive sports car to replace the car she bought last year.…
Finch Freight Company owns a truck that cost $46,o00. Currently, the truck's book value is $25,000, and its expected remaining useful life is four years. Finch has the opportunity to purchase for $30,100 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $6,300 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $10.000. Required Calculate the total relevant costs. Should Finch replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Keep Old Replace With New Total relevant costs Should Finch replace or continue the old truck? Replace the old truck
A business purchased a delivery truck 5 years ago at a cost of $45,000. It is now planning to replace that truck with a newer one, which would cost $60,000. The old truck has a trade-in value of approximately $12,500.(a1) How much of these truck costs represent sunk costs?
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Sooky has a spotter truck with a book value of $57,000 and a remaining useful Ilfe of five years. At the end of the five years the spotte purchase a new spotter truck for $137,000 and receive $32,700 in return for tradlng in Its old spotter truck. The old spotter truck has The new spotter truck will reduce varlable manufacturing costs by $26,700 per year over the five-year Iife of the new spotter truck. replacing the current spotter truck with the new truck is: Multiple Cholce $29,200 decrease $29,200 increase $32,700 increase $137,000 decrease $32,700 decrease

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