Suppose you want to buy a Tesla Model S, the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multicoat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2010 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S? O $107,000 O $87.500 O $57,000 O $68,000

Suppose you want to buy a Tesla Model S, the world's leading all-electric, zero-emission car that has a 265-mile range and can be recharged in three hours. The Tesla Model S Performance model has a list price of $87,500. However, you want several options (Performance Plus Package, red multicoat armor paint, Tech Package, Sound Studio Package, home charging station, performance wheels, and others) that will cost $17,500. An extended warranty will add an additional $5,000. However, if you put $50,000 down now and finance the balance over the next year, you will receive a dealer rebate of $5,000 off the list price. The dealer will give you a $7,000 trade-in allowance for your 2010 Honda Civic DX four-door sedan. In addition, you will have to pay a state sales tax of $10,000, an auto registration fee of $1,000 to the state, and a $1,000 destination charge to ship and prep the car. But because the Tesla Model S is an alternative energy vehicle, you qualify for a $2,500 state rebate and a $7,500 federal tax credit! Finally, your total finance charge is $7,000. Applying the price equation, what is your final price for the Tesla Model S? O $107,000 O $87.500 O $57,000 O $68,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Beryl's Iced Tea currently rents a bottling machine for $55,000 per year, including all maintenance expenses. It is considering purchasing a machine instead, and is comparing two options: a. Purchase the machine it is currently renting for $160,000. This machine will require $23,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $250,000. This machine will require $15,000 per year in ongoing maintenance expenses and will lower bottling costs by $12,000 per year. Also, $39,000 will be spent upfront training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year life with a negligible salvage value. The corporate tax rate is 20%. Should Beryl's Iced Tea continue…
Rally Quadcopters plans to sell a standard quadcopter (toy drone) for $45 and a deluxe quadcopter for $55. Rally purchases the standard quadcopter for $25 and the deluxe quadcopter for $30. Management expects to sell two deluxe quadcopters for every three standard quadcopters. The company's monthly fixed expenses are $23,100. How many of each type of quadcopter must Rally sell monthly to breakeven? To earn $15,400? First identify the formula to compute the sales in units at various levels of operating income using the contribution margin approach. (Abbreviations used: Avg. = average, and CM = contribution margin.) ( Operating income Fixed expenses >/Weighed-avg. CM per unit Breakeven sales in units Next compute the weighted-average contribution margin per unit. First identify the formula labels, then complete the calculations step by step. Standard Deluxe Total Sale price per unit Deduct Variable expense per unit 45 35 55 30 Contribution margin per unit Sales mix in units Contribution…
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will have OCF of -$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $23,000 to purchase and which will have OCF of -$550 annually throughout that vehicle's expected five-year life. Both cars will be worthless at the end of their life. If you intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 12 percent, what is the difference in the EAC of the two cars? Multiple Choice $413.25 $310.38 $317.88
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155,000. This machine will require $23,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $260,000. This machine will require $17,000 per year in ongoing maintenance expenses and will lower bottling costs by $14,000 per year. Also, $36,000 will be spent up front to train the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The marginal corporate tax rate is 20%. Should Beryl's Iced…
Radar Company sells bikes for $500 each. The company currently sells 4,150 bikes per year and could make as many as 4,510 bikes per year. The bikes cost $300 each to make: $180 in variable costs per bike and $120 of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 360 bikes for $460 each. Incremental fixed costs to make this order are $70 per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer? (a) Special offer analysis Sales Variable costs Contribution margin Income (b) The company should $ Per Unit Total 460 $ 165,600 180 0
You are considering two cars that you plan on making for 5 years. One has an EPA combined city and highway rating of 33 mpg. The second has an EPA rating of 36 mpg. Suppose gasoline costs $3.47 per gallon and you drive $10,000 miles each year. (Round your answer to the nearest cent.) (a) How much (in dollars) will you save in 1 year by purchasing the 36 mpg car? (b) If you deposit that amount at the end of each year for 5 years of ownership into account that earns 4.8% compounded annually, how much (in dollars) will you save over 5 years?
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $23,500 to purchase and which will have OCF of −$3,100 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $32,000 to purchase and which will have OCF of −$1,600 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 11 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Scion EAC_____? Toyota EAC____?
In 2014 to purchase an iphone 5s with 16GB memory without locking inany phone plan you have two options: 1) Buy at Walmart with a discounted price of$549. 2) Buy at T-Mobile with a 2-year 0% APR finance with a monthly payment of$26. In this case, the ticketed price would show $624=$26×24. By now, you shouldknow that 0% APR is a sham.Suppose that Jack didn’t have money to pay for a phone then. He had a credit cardwith a 18% APR. Should Jack use his credit card to buy the phone from Walmart orfrom T-mobile using its 0% APR financing? Support your answer with calculations.
Beryl's Iced Tea currently rents a bottling machine for $54,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $160,000. This machine will require $24,000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265,000. This machine will require $16,000 per year in ongoing maintenance expenses and will lower bottling costs by $13,000 per year. Also, $37,000 will be spent up front to train the new operators of the machine. Suppose the appropriate discount rate is 9% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the cost of the rental machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a 10-year life with a negligible salvage value. The marginal corporate tax rate is 30%. Should Beryl's Iced…
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $19,000 to purchase and which will have OCF of - $2,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $29,000 to purchase and which will have OCF of -$1,150 annually throughout that vehicle's expected 4 - year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 11 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Which one should you choose? multiple choice Scion xA Toyota Prius
You are given the task of analyzing the market for Sport Bike. You found that when the market price of the bike is For $500 the market demand is 9,200 bikes, whereas the market supply is 6,000 bikes. Yet, when the price rises to $650 the market demand is 6,800 bikes but the market supply is 8,000 bikes. Your tasks are: a)Define the equations of market demand and market supply for bikes. b)Find the equilibrium-price and equilibrium– quantity and draw a graph to show this market. c)Estimate the consumers’ surplus, producers' surplus, and bike market’s surplus.
Eddie is purchasing a fridge and must choose between fridge A and B. Fridge A is 500 W, has an upfront cost of $1,200, a lifetime of 10 years, an efficiency of 52%, and a resale value of $290. Fridge B is 300 W, has an upfront cost of $2,500, a lifetime of 16 years, an efficiency of 70%, and a resale value of $510. Electricity costs $0.10 per kWh. Inflation is 2.0% per year. Based on a calculation of net present value and the difference in NPV between the fridges, which fridge should you purchase? If the inflation is now 12% instead, what would be the NPV of each fridge?