Option 1 - A company is currently paying its employees $0.38 per kilometreto drive their own cars on company business.Option 2 - The company is considering supplying employees with cars, whichwould involve purchasing at $25000, with an estimated three year life, a netsalvage value of $8000, taxes and insurance at a cost of $900 per year, andoperating and maintenance expenses of $0.22 per kilometre. If the interestrate is 10% and the company anticipates an employee's annual travel to be22,000 kilometres, answer the following questions: (Keep 2 decimal places)The equivalent cost per km for Option 2 is $The equivalent cost per km for Option 1 is $The cheaper option for the company is

Whenever a business entity has two or more alternatives and it has to accept any one, then detailed…

Answered: The equivalent cost per km for Option 2…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 28P

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Your landscaping company can lease a truck for $7,200 a year (paid at year-end) for 6 years. It can instead buy the truck for $35,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is it cheaper to buy or lease? c. What is the present value of the cost of leasing if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Is it now cheaper to buy or lease?
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what would the formula be to solve for the table value? the table value is what i need to solve the problem
Suppose you decide to obtain a 4-year lease for a car and negotiate a selling price of$28,990, including license fees. The trade-in value of your old car is $3850. If you makea down payment of $2400, the money factor is 0.0027, and the residual value is$15,000, find each of the following.a. The net capitalized costb. The average monthly finance chargec. The average monthly depreciationd. The monthly lease payment
A new car will cost $24,000 to buy and $5500 annually to operate. If it is sold for $9300 after 6 years, what is the EUAC? Assume that the owner’s interest rate is 3% for the time value of money.
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Not sure what the table factor would be
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You are trying to decide between two mobile phone carriers. Carrier A requires you to pay $200 for the phone and then monthly charges of $58 for 24 months. Carrier B wants you to pay $115 for the phone and monthly charges of $68 for 12 months. Assume you will keep replacing the phone after your contract expires. Your cost of capital is 3.7% APR, compounded monthly. Based on cost alone, which carrier should you choose? The EAA for plan A is $ (Round to the nearest cent.)

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The equivalent cost per km for Option 2 is $ The equivalent cost per km for Option 1 is $ The cheaper option for the company is