Spreadsheet Modeling & Decision Analysis: A Practical Introduction To Business Analytics, Loose-leaf Version
8th Edition
ISBN: 9781337274852
Author: Ragsdale, Cliff
Publisher: South-Western College Pub
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An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently
owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost
$5,200 and it will cost $1,300 per year to operate at the end of year that follows. She will keep the vehicle for 5 years; at the end of this
period, the upgraded vehicle will have a salvage value of $3,800. Alternatively, she could trade in her vehicle to lease a new vehicle. She
estimates that her current vehicle has a trade-in value of $9,800 and that there will be $4,100 due at lease signing. She further
estimates that it will cost $2,900 per year to lease and operate the vehicle. The independent contractor's MARR is 11%. Compute the
EUAC of both the upgrade and lease alternatives using the insider perspective.
Click here to access the TVM Factor Table Calculator.
1943.56
EUAC(keep):
$…
A 10% coupon $1,000 par value bond with four years to maturity is currently selling for $900.
The bond pays coupon payments on a semiannual basis. If interest rates move in the
corporation's favor, the bond will be called for $1,050.
What is the bond's yield to maturity?
13.30%
11.65%
10.00%
8.48%
A young computer engineer has $12,000 to invest and three different investment options (funds) to choose from. Type 1 guaranteed investment funds offer an expected rate of return of 7%, Type 2 mixed funds (part is guaranteed capital) have an expected rate of return of 8%, while an investment on the Stock Exchange involves an expected rate of return of 12%, but without guaranteed investment capital. Computer engineer has decided not to invest more than $2,000 on the Stock Exchange in order to minimize the risk. Moreover for tax reasons, she needs to invest at least three times more in guaranteed investment funds than in mixed funds.
Assume that at the end of the year the returns are those expected; she is trying to determine the optimum investment amounts.
(a) Express this problem as a linear programming model with two decision variables.(b) Solve the problem with the graphical solution procedure and define the optimum solution.
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