What is the irr on the incremental investment

Assignment Help Econometrics
Reference no: EM13204262

A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a salvage value of $5,000 after 5 years.

The fuel economy of the diesel van is 17MPG, the gasoline powered van achieves 12.5MPG. Both vehicles have a salvage value of $5,000 after 5 years. Both gasoline and diesel are available at $3.59 per gallon. The company uses 20% for MARR (Minimal Accepted Rate of Return).

If the company plans to use the vans to run 75,000 miles per year, what is the IRR (Incremental Rate of Return) on the incremental investment?

Reference no: EM13204262

Questions Cloud

Find what is the price elasticity of demand : The demand function for bicycles in Mapleville is estimated to be Qd = 2,500 + 10Y - 6 P Where Y denotes income in thousands, Qd is the quantity demanded in units, and P is the price of bicycles. When P = $120, Y = 12 What is the price elasticity o..
State engineers be assigned to maximize sales : If the assignment of sales engineers to areas will result in the expected sales as shown, how should the engineers be assigned to maximize sales?
List the determinant that led you to that conclusion : For each event given below, respond to the following points using the determinants of demand and supply A. Determine whether demand or supply changes or if the event instead causes a change in quantity demanded or quantity supplied.
State the capital is depreciated at a rate : What effect would a $10 million capital expense have on this year's earnings if the capital is depreciated at a rate of $2 million per year for five years? What effect would it have on next
What is the irr on the incremental investment : A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a sa..
State the probability that the caferteria serves peas : If the school cafeteria serves meat loaf, there is a 70% chance that they will serve peas. If they do not serve meat loaf, there is a 30% chance that they will serve peas anyway. The students know that meat loaf will be served exactly once durin..
What is the breakeven annual mileage for extra investment : A company is considering purchasing a fleet of delivery vans which are available with either a diesel or gasoline fueled motor. The gasoline powered van has an initial price of $29,750, the diesel powered one costs $32,250. Both vehicles have a sa..
Compute margins at the bottom and sides : margins at the bottom and sides and a 3 inch margin at the top. What dimensions will give the largest printed area?
How much interest will be paid over the eight-year period : how much interest is payable each year on a loan of $2000 if the interest rate is 10% per year when half of the loan principal will be repaid as a lump sum at the ed of four years and the other half will be repaid in one lump-sum amount at the end..

Reviews

Write a Review

Econometrics Questions & Answers

  Itemize the adjustments and the corresponding value.

The Columbia Company manufactures a battery-powered saw. Due to increased demand during the past few years, Columbia has increased plant capacity for the saw to 300,000 units. The firm's expected output and sales for the next year in their normal..

  Survey to learn the buying intentions

May Brothers Department Store has constructed a survey to learn purchasing intentions of a sample of sixty-two department store customers.

  Identify in terms of consumption for each person

Draw a separate box diagram to show what the contract curve might look like if Aisha was concerned about very low consumption of food and clothing by Robin, but Robin was only concerned about his own consumption.

  Calculate steady-state capital-labor ratio for each country

Consider 2 countries, Avataria and Twilightia, which can be described by the Solow model. Avataria has a capital-labor ratio that is initially twice as big as that of Twilightia, but neither country is yet in a steady state. Both countries have th..

  Determine the outlook of fictitious economy

According to the following economic indicators, estimate the outlook of this fictitious economy. Although I know what these indicators mean,

  What is the total cost of operating the video store

Until recently you worked as an accountant, earning $30,000 annually. Then you inherited a piece of commercial real estate bringing in $12,000 in rent annually. You decided to leave your job and operate a video rental store in the office space you..

  What is the new equilibrium price level

Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown at the top left of the next page. a. Use the data above to graph the aggregate demand and aggregate supply curves. What is the equilibrium pri..

  The theoretical background and hypothesis

The theoretical background and hypothesis and the methodology section and What is the theoretical basis for answering the research question? That is, what are the arguments, given the existing theories, about how you key independent variable "X" i..

  What is the equivalent present worth for the investment

A $90,000 investment is made. Over a 5 year period, a return of $30,000 occures at the end of the first year. Each successive year yields a return that is 10 percent less than the previous year's return. If money is worth 5 percent.

  Calculate the saving function

Suppose the second equation is changed to I = 500. What is the new equilibrium level of income? How much does the $100 increase in investment change equilibrium GDP?

  Calculate the number of physicians

The services of a certified psychologist cost $110 per hour, and an extended health plan covers 50 percent of that cost. Under the plan, the clients covered used 625 hours of this service in a typical three-month period. To save money, the extende..

  Question about high unemployment rate

Despite very low growth of GDP in 2008 and 2009, and still high unemployment rate of 9.5 percent in June 2010.

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