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Leonard Motors is trying to increase its international export business. It is considering several alternatives. The three options along with their associated cash flows are listed below. Options: 01: Equipment costs $900K now and another $560K in 2 years. Annual M&0 costs $79,000. Life of project is 10 years. 02 Subcontract production for an annual payment of S280K for years 0 (now) through 10. 03 Pay $400K now. Annual expenses exceed annual revenue starting at EOY 1 by $420K and increase 5% per year through EOY 5. Annual revenues exceed annual expenses by $50K from EOY 6 to 10. There is a salvage value of $10OK at EOY 10. Please calculate your answer to the nearest whole dollar. Format 0000 No commas The MARR for Leonard Motors is 15% APR compounded quarterly . Which option is most financially beneficial to Leonard Motors? OA. Option 2 о в. Орion 3 OC. Option 1 . Based on part a, what is the PW of the most financially beneficial to Leonard Motors? $

Leonard Motors is trying to increase its international export business. It is considering several alternatives. The three options along with their associated cash flows are listed below. Options: 01: Equipment costs $900K now and another $560K in 2 years. Annual M&0 costs $79,000. Life of project is 10 years. 02 Subcontract production for an annual payment of S280K for years 0 (now) through 10. 03 Pay $400K now. Annual expenses exceed annual revenue starting at EOY 1 by $420K and increase 5% per year through EOY 5. Annual revenues exceed annual expenses by $50K from EOY 6 to 10. There is a salvage value of $10OK at EOY 10. Please calculate your answer to the nearest whole dollar. Format 0000 No commas The MARR for Leonard Motors is 15% APR compounded quarterly . Which option is most financially beneficial to Leonard Motors? OA. Option 2 о в. Орion 3 OC. Option 1 . Based on part a, what is the PW of the most financially beneficial to Leonard Motors? $

Essentials Of Investments
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
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Leonard Motors is trying to increase its international export business. It is considering several alternatives. The three options along with their associated cash flows are listed below. Options: 01: Equipment costs $900K now and another $560K in 2 years. Annual M&O costs $79,000. Life of project is 10 years. 02: Subcontract production for an annual payment of $280K for years 0 (now) through 10. 03: Pay S400K now. Annual expenses exceed annual revenue starting at EOY 1 by S420K and increase 5% per year through EOY 5. Annual revenues exceed annual expenses by $50K from EOY 6 to 10. There is a salvage value of $100K at EOY 10. Please calculate your answer to the nearest whole dollar. Format 0000 No commas The MARR for Leonard Motors is 15% APR compounded quarterly a. Which option is most financially beneficial to Leonard Motors? O A. Option 2 O B. Option 3 OC. Option 1 b. Based on part a, what is the PW of the most financially beneficial to Leonard Motors? $
Transcribed Image Text:Leonard Motors is trying to increase its international export business. It is considering several alternatives. The three options along with their associated cash flows are listed below. Options: 01: Equipment costs $900K now and another $560K in 2 years. Annual M&O costs $79,000. Life of project is 10 years. 02: Subcontract production for an annual payment of $280K for years 0 (now) through 10. 03: Pay S400K now. Annual expenses exceed annual revenue starting at EOY 1 by S420K and increase 5% per year through EOY 5. Annual revenues exceed annual expenses by $50K from EOY 6 to 10. There is a salvage value of $100K at EOY 10. Please calculate your answer to the nearest whole dollar. Format 0000 No commas The MARR for Leonard Motors is 15% APR compounded quarterly a. Which option is most financially beneficial to Leonard Motors? O A. Option 2 O B. Option 3 OC. Option 1 b. Based on part a, what is the PW of the most financially beneficial to Leonard Motors? $
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