The manufacturer would then sell the returned cars

Assignment Help Business Economics
Reference no: EM13151544

Leasing Residuals
In the late 1990's, care leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the care. If the customer decided to keep the car, the customer would pay a price to the manufacturer, the "residual value", computed as 60% of the new care price. The manufacturer would then sell the returned cars at auction. In 1999, the manufacturer lost an average of $480 on each returned car (the auction price was on average, $480 less than the residual value).
a. Why was the manufacturer losing money on this program?
b. What should the manufacturer do to stop losing money?         

Reference no: EM13151544

Questions Cloud

Probability student selected at random is older than other : The average age of statistics students nationwide is 22. The standard deviation is 2.5 years. Assume the age is a normally distributed variable. Find the probability that one student selected at random is older than 23.
Tax implications for income earned and losses : Identify the basic forms of conducting business, and distinguish and explain the tax implications for income earned and losses incurred by a sold proprietor, partnership, and corporation.
Transaction on net operating income : XYZ Company accepted a national credit card for a $3,000 purchase. The cost of the goods sold is $2,400. The credit card company charges a 3% fee. What is the impact of this transaction on net operating income?
Explain why the short-run aggregate supply curve : Explain why the short-run aggregate supply curve is not vertical, but the long-run aggregate supply curve is vertical.
The manufacturer would then sell the returned cars : In the late 1990's, care leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the care. If the customer decided to keep the car, the c..
Standards of the regulatory bodies : Prepare a 300-750-word paper, in which you examine at least four accounting regulatory bodies, provide organizational description and discuss impact on financial reporting on how an organization complies with the standards of the regulatory bodies..
Find probability of survival of adults to the next time : Probability of survival of eggs to breeding adults at the next time step is 0.4. Probability of survival of adults to the next time step is 0.7. What is average R?
Summary of teh payroll of matrix publishing : According to a summary of teh payroll of Matrix Publishing Co., $380,000 was subject to the 7.5% FICA tax. Also $16,000 was subject to state and federal unemployment taxes.
Hong kong dollar : Hong Kong dollar, and the one-year forward exchange rate is 9 yen per dollar. Determine whether or not there is an arbitrage opportunity and, if possible.

Reviews

Write a Review

 

Business Economics Questions & Answers

  Labor supply and labor demand

Illustrate the solution graphically using Labor Supply / Labor Demand and Production Function diagrams.

  Fixed exchange rate regime on household

What is the impact of a tax cut in an economy operating under a fixed exchange rate regime on household spending, interest rates.

  Illustrate what whould be appropriate elasticity to compute

Illustrate what whould be the appropriate elasticity to compute. Using the midpoint method, compute this elasticity.

  Producers were paid for meeting output targets

In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those circumstances.

  Compare with single versus multiple bidders

How do the buyer's returns compare with the method of payment, and how do they compare with single versus multiple bidders.

  Monopolist manufacturer sells his products

Suppose a monopolist manufacturer sells his products through a monopolist retailer.  The marginal cost of production is  c  = 5.  Assume that retail demand is Q(p,s) = s(10-p)100, where s is retailer's level of effort to sell the product.  The cost..

  Explain at the current price- eight units are demanded

Explain at the current price, eight units are demanded each period. If the objective is to increase total revenue, should the price be increased or decreased.

  How do se forces differ from external stakeholders

Identify at least four forces in general environment of organizations and provide an example of each for an industry or business. How do se forces differ from external stakeholders in task environment.

  Delivery also demand cruve

Suppose which equilibrium income is 3200 also the multiplier is 2.38. Equilibrium income would rise to 3400 if planned investment.

  Welfare of individuals in indian villages

Assume that we care about the average welfare of individuals in Indian villages, i.e., we put equal weight on each individual's utility.

  Elucidate what happens to consumer surplus in the market

Suppose there is an early freeze in California that reduces the size of the lemon crop. Elucidate what happens to consumer surplus in the market for lemons.

  Estimate all possible unknowns in xyz economy

Assume that velocity of money is 5, nominal GDP is $1,350,000 and cost level is 3. Estimate all possible unknowns in XYZ's economy, if its federal reserve buys $9,000.00 in government bonds.

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