The least-expensive car for your new delivery service

Assignment Help Financial Management
Reference no: EM131358486

You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,500 to purchase and which will have OCF of –$1,300 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,500 to purchase and which will have OCF of –$700 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.)

Reference no: EM131358486

Questions Cloud

Ethical dilemmas in the past : 1. Is it unrealistic to expect others to live by the Golden Rule? 2. Consider how you have resolved ethical dilemmas in the past. What would you do differently now?
Re design the structure in given example : Re-design the structure in given Example avoiding thick clusters of plies and taking into account in-situ strength. Use tt = 1.2 mm and ν23 = 0.38.
What is the optimum orientation for the fibers : A cylindrical pipe with diameter d = 1.0 m is subject to internal pressure p = 5.0 MP a but it is free to expand along the length, so that only hoop stress σ = pd/2t is developed in the wall.
The least-expensive car for your new delivery service : You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,500 to purchase and which will have OCF of –$1,300 annually throughout the vehicle’s expected life of three years as..
Draw the top view repetitive unit cell : Redefine the weave parameters, first by 90o rotating the weaving pattern, and second by considering the opposite face of the weaving pattern, on both initial orientation and 90o rotated orientation of the weaving pattern.
Performing a swot analysis : In performing a SWOT analysis, provide a key term for each letters representing swot and say how company can have advantage over the other using the key term chosen.
GTB switches to the proposed capital structure : GTB, Inc., has a 25 percent tax rate and has $57.80 million in assets, currently financed entirely with equity. Equity is worth $5 per share, and book value of equity is equal to market value of equity. What will be the level of expected EPS if GTB s..
Discuss the fallacies that the argument makes : If you decide that the essay is not successful, then discuss the fallacies that the argument makes. You are still required to have a strong introduction (hook and thesis), body paragraphs that discuss one fallacy at a time, and a conclusion.

Reviews

Write a Review

 

Financial Management Questions & Answers

  As a general rule-the optimal capital structure

As a general rule, the optimal capital structure. Company A and Company B have the same tax rate, the same total assets, and the same basic earning power. Both companies have a basic earning power that exceeds their before-tax costs of debt, rd. Howe..

  Compute the yield to maturity

Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which of course is also the amount of principal to be paid at maturity. The bonds are currently selling for $590. They have 10 years remaining to maturity. The annual inter..

  Financing outstanding-debt and market-common stock

The Saunders Investment Bank has the following financing outstanding. Debt: 120,000 bonds with a coupon rate of 8 percent and a current price quote of 110; the bonds have 20 years to maturity. 290,000 zero coupon bonds with a price quote of 17.5 and ..

  The direct spot quotes on the pound

The direct spot quotes on the pound in New York are $1.4783 – 91. The 30-day forward quotes in points are (bid - ask) 14 – 9. What is the outright 30-day forward bid quote?

  Consider buying a share of stock at price

Suppose you consider buying a share of stock at a price of $55. The stock is expected to pay a dividend of $6 next year and to sell then for $57. The stock risk has been evaluated at β = 0.5. Using the SML, calculate the fair rate of return for a sto..

  The amount of the aftertax salvage value of the equipment

Kingston Equipment is considering a project that will require the purchase of $1,480,000 in new equipment. The equipment will be depreciated straight-line to a zero book value over the 7-year life of the project. What is the amount of the aftertax sa..

  Money will be in the account after you made the last payment

You plan to buy a house in 9 years. You want to save money for a down payment on the new house. You are able to place $182 every month at the end of the month into a savings account at an annual rate of 14.82 percent, compounded monthly. How much mon..

  Discuss the importance of language in business

The European Union believes that knowledge of foreign languages is an important factor in business today. Discuss the importance of language in business. How will the European Union's program help British business people gain an edge over their rival..

  What is its value if the previous dividend

nvestors require a 15% rate of return on Levine Company's stock (that is, rs = 15%). What is its value if the previous dividend was D0 = $2.25 and investors expect dividends to grow at a constant annual rate of (1) -3%, (2) 0%, (3) 3%, or (4) 13%? Ro..

  What is general industries expected current share price

XYZ Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 2% per year. If the weighted average cost of capital is 8% and XYZ has cash of $15 million, debt ..

  Evaluate growth of professionalism and ethical obligations

CFP 1 ASSIGNMENT. Evaluate the growth of professionalism and ethical obligations in the financial planning industry and how this has been beneficial to the Australian public

  Calculate the average daily float

Your firm receives 10 checks per month. Of these, 6 are for $1,000 and 4 are for $500. The delay for the $1,000 checks is 5 days, and the $500 checks are delayed 8 days. Calculate the average daily float.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd