Reference no: EM131147104
The City of San Jose must replace a number of its concrete mixer trucks with new trucks. It has received two bids and has evaluated closely the performance characteristics of the various trucks. The Rock built truck, which costs $74,000, is top-of-the-line equipment. The truck has a life of eight years, assuming that the engine is rebuilt in the fifth year. Maintenance costs of $2,000 a year are expected in the first four years, followed by total maintenance and rebuilding costs of $13,000 in the fifth year. During the last three years, maintenance costs are expected to be $4,000 a year. At the end of eight years the truck will have an estimated scrap value of $9,000.
A bid from Bulldog Trucks, Inc., is for $59,000 a truck. Maintenance costs for the truck will be higher. In the first year they are expected to be $3,000, and this amount is expected to increase by $1,500 a year through the eighth year. In the fourth year the engine will need to be rebuilt, and this will cost the company $15,000 in addition to maintenance costs in that year. At the end of eight years the Bulldog truck will have an estimated scrap value of $5,000.
a. If the City of San Jose's opportunity cost of funds is 8 percent, which bid should it accept? Ignore tax considerations, because the city pays no taxes.
b. If its opportunity cost were 15 percent, would your answer change?
|
What is netflixs long run objective
: What is Netflix's long-run objective? How does Netflix plan to achieve its long-run objective? How would you assess Netflix's business model?
|
|
How the constitution addressed the weaknesses in the article
: How the Constitution addressed the complaints in the Declaration of Independence? How the Constitution addressed the weaknesses in the Articles of Confederation?
|
|
What order and class of leveling does this represent
: The relative error of the difference in elevation between two benchmarks directly connected in a level circuit and located 90 km apart is ±0.009 m. What order and class of leveling does this represent?
|
|
Explain the event and its significance to the wars outcome
: Imagine you are a member of the U.S. militia in the early 1800s. Write a 350-word letter to a family member explaining the event and its significance to the war's outcome.
|
|
Which bid should it accept
: If the City of San Jose's opportunity cost of funds is 8 percent, which bid should it accept? Ignore tax considerations, because the city pays no taxes.
|
|
Calculate the net effect
: calculate the net effect that a change in the annually compounded risk free rate on the price of a commodity future contract whose spot price as of march 30 was 49.90.
|
|
Discuss issues congress encounters in its efforts to pass
: Discuss the issues Congress encounters in its efforts to pass legislation in today's society with the issues Congress encountered during the Reconstruction era.
|
|
Describe the function of ocean
: Lab: The Ocean. Describe the function of ocean currents in the distribution of heat on Earth. Why do you think the Equatorial currents in the Atlantic Ocean are more unorganized and less distinct than those in the Pacific
|
|
What is the forward rate
: Suppose the spot rates for 1 and 2 years are s1=6.3% and s2=6.9% with annual compounding.- What is the forward rate, f1, 2 assuming annual compounding?
|