www.MBAbullshit.com Answer: Leasing is better by $6,302.96! CO Your company has to choose between two trucking options. Buy your own 5 company trucks or lease it from a trucking company. If bought, the trucks cost $43,079 each and will incur maintenance costs of $1,848 starting the end of the second year, and maintenance costs tend to grow at a rate of 11% per year. You will do one last maintenance procedure, and then sell the 'used' trucks at the end of 5 years for selling price of $21,385 each. If leased, it will cost a flat $27,394 per year each starting end of the 1st year and maintenance will be provided by the leasing company at no extra charge. Bank interest rates are now at 3.1%. Price of diesel is the same for both options, and it's $3 per gallon; and expected to increase by 10% per year. Using the NPV concept, which is a better option and by how much is it better? RE VIDEOS
www.MBAbullshit.com Answer: Leasing is better by $6,302.96! CO Your company has to choose between two trucking options. Buy your own 5 company trucks or lease it from a trucking company. If bought, the trucks cost $43,079 each and will incur maintenance costs of $1,848 starting the end of the second year, and maintenance costs tend to grow at a rate of 11% per year. You will do one last maintenance procedure, and then sell the 'used' trucks at the end of 5 years for selling price of $21,385 each. If leased, it will cost a flat $27,394 per year each starting end of the 1st year and maintenance will be provided by the leasing company at no extra charge. Bank interest rates are now at 3.1%. Price of diesel is the same for both options, and it's $3 per gallon; and expected to increase by 10% per year. Using the NPV concept, which is a better option and by how much is it better? RE VIDEOS
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
Problem 1PS
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Answer: Leasing is better by $6,302.96!
Q
Your company has to choose between two trucking options. Buy your own
5 company trucks or lease it from a trucking company. If bought, the
trucks cost $43,079 each and will incur maintenance costs of $1,848
starting the end of the second year, and maintenance costs tend to grow
at a rate of 11% per year. You will do one last maintenance procedure,
and then sell the 'used' trucks at the end of 5 years for selling price of
$21,385 each. If leased, it will cost a flat $27,394 per year each
starting end of the 1st year and maintenance will be provided by the
leasing company at no extra charge. Bank interest rates are now at 3.1%.
Price of diesel is the same for both options, and it's $3 per gallon; and
expected to increase by 10% per year. Using the NPV concept, which is a
better option and by how much is it better?
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