The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners forcompany principals. The purchase price for the Ford Explorer will be $29,250. Annual maintenance costs for theExplorer are expected to be $425.0 per year more than that of the 4 Runner. The purchase price for Toyota 4 Runners is36,750 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the incremental ROR between the two vehicles? (b) Provided the firm's MARR is 15.00% per year,which vehicle should it buy? (Round the final answer to three decimal places.)a) The incremental ROR between the two vehicles is%b) The firm should buy as the incremental ROR is (Click to select) the MARR.

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Answered: The CFO of a consulting engineering…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners for company principals. The purchase price for the Ford Explorer will be $29,750. Annual maintenance costs for the Explorer are expected to be $525 per year more than that of the 4Runner. The purchase price for Toyota 4Runners is 35,000 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the range incremental ROR (i.e. 11% -12%) between the two vehicles? (b) Provided the firm's MARR is 12% per year, which vehicle should it buy? O a. (a) 3% -4% (b) buy the Ford Explorer O b. (a) 14%-15% O c. (a) 16% -17% O d. (a) 15% -16% (b) buy the Toyota 4Runner (b) buy the Toyota 4Runner (b) buy the Ford Explorer
A company plans to finance a large project that will last 5 years. The company will borrow $480,000 now to finance the project. How much will the company have to receive in annual payments for 5 years, provided it will also receive a final lump sum payment after 10 years in the amount of $50,000. The MARR is 20% per year on this investment. Your Answer: Answer units
Self-tightening wedge grips are designed for tensile testing applications up to 1200 pounds.The cash flow associated with the product is shown below. Determine the cumulative cash flow after year 4. Year Revenue, $ Costs, $ 1 7,000 -14,000 The cumulative cash flow after year 4 is $ 2 17,000 -30,000 3 23,000 -22,000 4 19,000 -6,000
! Required information Eight years ago, Ohio Valley Trucking purchased a large- capacity dump truck for $102,000 to provide short-haul earth-moving services. The company sold it today for $45,000. Operating and maintenance costs averaged $10,200 per year. A complete overhaul at the end of year 4 costs an extra $3600. Calculate the annual cost of the truck at i = 8% per year. The annual cost of the truck is $- per year.
The first cost of an electric rebar bender is P346,000 and a salvage value of P47,000 at the end of its life for 5 years. Money is worth 5.9% annually. If there is no salvage value and the annual maintenance cost is P15,000, find the annual cost of perpetual service.
A young man bought a second hand car for P150,000.00 in cash. The owner of the car agreed to be paid on instalment basis with a downpayment of P50,000.00, P30,000.00 after the end of one year, P40,000.00 at the end of second year and the final payment to be made after 4 years. Determine the final payment if money is worth 15% per annum
The Ford Motor Company has re-designed its best selling truck by substituting aluminum for steel in many key body parts. This saves 600 pounds of weight and decreases gas consumption. The fuel consumption will be 27 miles per gallon (mpg), up from 24 mpg of the previous year's model. Ford will increase the sticker price of the re-designed vehicle by $470. Assume this vehicle will be driven 16,000 miles per year and its life will be 9 years. The owner's MARR is 8% per year and gasoline costs $3.02 per gallon. What is the present worth of the incremental capital outlay for the lighter truck? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. The present worth of the incremental capital outlay for the lighter truck is $ (Round to the nearest dollar.)
A small company wishes to set up a fund that can be used for technology purchases over the next 6 years. Their forecast is for $16,000 to be needed at the end of year 1, decreasing by $2,000 each year thereafter. The fund earns 9% per year. How much money must be deposited to the fund at the end of year 0 to just deplete the fund after the last withdrawal?
Milwaukee Machine Tool is planning to buy a machine for S15,000 with a salvage value of 20% of the initial cost after a life of 10 years. The company estimates it will need $900 for supplies, $250 for maintenance, $100 for utilities and S1,500 for overhead. They estimate these will increase by S1200, 8%, 10% and $200 respectively over the 10-year machine life. If interest rate is 5% per year, what is the net present value of the project? -$78,301.03 2 -$82,216.08 3 -$93,301.03 -$52,216.08
Ans is $ 7.322 please correct me
Wall’s Pharmacy will have to sell a new product that has an estimated revenue of $5,100 per month and costs of $1,000 per month with an initial purchase of $28,000. How long will Wall's Pharmacy have to sell a new product if the MARR is 3% per month? Wall's Pharmacy will have to sell a new product for __ months.

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