KASuppose that two certain cars have the following average operating and ownership costs.Car AOperating$0.26$0.12Car BIf you drive 30,000 miles per year, by how much does the total annual expense for Car A exceed that of Car B over seven years?The total annual expense for Car A exceeds that of Car B by $(Round to the nearest dollar as needed.)over seven years.Average Costs per MileOwnership$0.72$0.31ATotal$0.98$0.43

Answer:- Expense meaning:- Expenses are simply another word for the cost. The operational costs…

Answered: Suppose that two certain cars have the…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs

Section: Chapter Questions

Problem 1EP

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3. A used car M costs $4,900.00 and operating costs are 11 cents per mile. At the end of 5 years you estimate its selling price to be $1,500.00. Another used car N costs $6,000.00 and operating costs are 9 cents per mile. At the end of 5 years you estimate the selling price to be $X. Assume you will be driving 15,000 miles per year. Determine the value of X so the two cars are equally worth to you at i=7%.
Which of the following is an example of a mixed cost behavior? a. A rental van charges $50 / day for the first 100 miles, and $0.42 per mile beyond100 miles.b. A piece of equipment can be leased for a year for a fee of $14,000 regardless ofhow many hours it is operated.c. A vacation home charges $250 per day regardless of the number of occupants.d. A local utility charges $0.14 per kilowatt-hour of energy consumed.
You have gathered the following vehicle costs: Vehicle Costs $ 2,600 Annual mileage $ 960 Miles per gallon $ 1,110 Average gasoline price $ Annual depreciation Current year's loan interest 18,300 24 Insurance 2$ 3.10 per gallon 2$ 448 License and registration fees Parking/tolls 73 Oil changes/repairs $ 491 (a) Calculate the annual variable and fixed costs of the vehicle. (Round answer to nearest whole number.) Variable & Fixed Costs Annual variable cost Annual fixed cost (b) Compute the operating cost per mile. (Enter your answer in cents rounded to 1 decimal place.) Operating cost cents per mile
Your company is deciding whether to purchase a durable delivery vehicle or a short-term vehicle. The durable vehicle costs $25 000 and should last five years. The short-term vehicle costs $10 000 and should last two years. If the cost of capital for the company is 15 per cent, then what is the equivalent annual cost for the best choice for the company? (Round to the nearest dollar.) $6151, short-term vehicle $5000, either vehicle $7458, long-term vehicle $5000, short-term vehicle
Baird Rentals can purchase a van that costs $110,000; it has an expected useful life of five years and no salvage value. Baird uses straight-line depreciation. Expected revenue is $40,425 per year. Assume that depreciation is the only expense associated with this Investment. Required a. Determine the payback period. Note: Round your answer to 1 decimal place. b. Determine the unadjusted rate of return based on the average cost of the investment. Note: Round your answer to 1 decimal place. (l.e., .234 should be entered as 23.4). a. Payback period b. Unadjusted rate of return years %
ABC Taxi has an average fixed cost of $8,000 a year for each car. Each mile driven has variable cost $.40 and collect fares of $.60. How many miles a year does each car have to travel before making profit?
Еxample: Determine the probable cost per hour for owning and operating a truck with rubber tires after renting it for 6 month with an option to buy it later. Make use of the following information: Actual truck cost $50000 $10000 160 hp tires cost Engine Crankcase capacity Hours between oil changes Operating factor Useful life 60 liter 80 hr 50% б уears Operating hours per year Rental period Rental charges per month Tires useful life 2000 6 months $2500 5000 hr Maintenance for truck (60% of truck's Depreciation) Maintenance for tires (15% of tires' Depreciation) Investment (12% of Average Value) Cost of fuel per liter Cost of oil per liter 0.25 $/liter 1.50 $/liter
Car A initially costs $500 more than Car B, but it consumes 0.04 gallon/mile versus 0.05 gallon/mile for B. Both vehicles last 8 years, and B’s salvage value (the value when it is traded in after 8 years) is $100 smaller than A’s. Fuel costs $2.40 per gallon. Other things being equal, at how many miles of use per year (X) is A preferred vs. B?
The initial cost of a van is $22,800; its salvage value after 5 years will be $8500. Maintenance is estimated to be a uniform gradient amount of $225 per year (with no maintenance costs the first year), and the operation cost is estimated to be 36 cents/mile for 400 miles/month. If money is worth 6%, what is the approximate equivalent uniform annual cost (EUAC) for the van, expressed as a monthly cost?
Your company is planning to purchase a new loader for $20,937. If the company keeps the old loader, it will have $1,959 additional maintenance cost for the first year and increases $308 each year till the eighth year. Given the company's minimum attractive rate of return (MARR) is 6%, what is the present cost of keeping the old loader? 6% 1 2 3 4 5 879 6 9 Single Payment Compound Present Amount Worth Factor Factor Find F Find P Given F Given P F/P P/F 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1689 .9434 .8900 .8396 .7921 .7473 .7050 .6651 .6274 5919 Sinking Fund Factor Find A Given F A/F 1.0000 .4854 3141 .2286 .1774 .1434 .1191 1010 0870 Compound Interest Factors Uniform Payment Series Capital Recovery Factor Find A Given P A/P 1.0600 .5454 .3741 .2886 2374 2034 .1791 1610 1470 Compound Amount Factor Find F Given A F/A 1.000 2.060 3.184 4.375 5.637 6.975 8.394 9.897 11 491 Present Worth Factor Find P Given A P/A 0.943 1.833 2.673 3.465 4.212 4.917 5.582 6.210 6.802 Arithmetic…
Stuart Rentals can purchase a van that costs $105,000; it has an expected useful life of three years and no salvage value. Stuart uses straight-line depreciation. Expected revenue is $52,220 per year. Assume that depreciation is the only expense associated with this investment. Required a. Determine the payback period. (Round your answer to 1 decimal place.) b. Determine the unadjusted rate of return based on the average cost of the investment. (Round your answer to 1 decimal place. (i.e., .234 should be entered as 23.4).) a. Payback period years b. Unadjusted rate of return %
You have gathered the following vehicle costs: Vehicle Costs Annual depreciation Current year's loan interest Insurance License and registration fees Parking and tolls Annual mileage Miles per gallon Average gasoline price Oil changes and repairs Required a a. Calculate the annual variable and fixed costs of the vehicle. b. Compute the operating cost per mile. Required b Operating cost $ 3,900 $ 1,450 $ 1,410 Complete this question by entering your answers in the tabs below. $ 66 $ 424 19,300 0.6 X 24 $ 3.40 per gallon $ 438 cents per mile Compute the operating cost per mile. Note: Do not round intermediate calculations. Enter your answer in cents rounded to 1 decimal place Answer is complete but not entirely correct. < Required a Required b D

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