You are trying to pick the least- expensive car for your new delivery service. You have two choices: the Scion XA, which will cost $22,000 to purchase and which will have OCF of -$2,800 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $30,500 to purchase and which will have OCF of -$1,450 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,

You are trying to pick the least- expensive car for your new delivery service. You have two choices: the Scion XA, which will cost $22,000 to purchase and which will have OCF of -$2,800 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $30,500 to purchase and which will have OCF of -$1,450 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,

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $23,000 to purchase and which will have OCF of −$550 annually throughout that vehicle's expected five-year life. Both cars will be worthless at the end of their life. If 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, and if your business has a cost of capital of 12 percent, what is the difference in the EAC of the two cars?
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion XA, which will cost $18,500 to purchase and which will have OCF of -$2,100 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $28,000 to purchase and which will have OCF of -$1,100 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 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) Answer is complete but not entirely correct. Scion's EAC Toyota's EAC $ (9,809.94) ✔ $ (10,337.16) X Which one should you choose? Scion XA Toyota Prius
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $19,000 to purchase and which will have OCF of - $2,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $29,000 to purchase and which will have OCF of -$1,150 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.) Which one should you choose? multiple choice Scion xA Toyota Prius
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $20,500 to purchase and which will have OCF of -$2,500 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $29,000 to purchase and which will have OCF of -$1,300 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.) Answer is complete but not entirely correct. Scion's EAC Toyota's EAC S (12,716.50) $ (11,914.44) Which one should you choose? Toyota Prius Scion XA
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,000 to purchase and which will have OCF of −$650 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 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Kia Rio, which will cost $14,000 to purchase and which will have OCF of -$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,000 to purchase and which will have OCF of -$650 annually throughout that vehicle's expected four-year life. Both cars will be worthless at the end of their life. If 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 12 percent, calculate the EAC. Note: Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations. Round your answers to 2 decimal places. EAC Rio EAC Prius Which one should you choose? Kia Rio
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Kia Rio, which will cost $19, 500 to purchase and which will have OCF of -$ 2,300 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $28, 000 to purchase and which will have OCF of -$1,200 annually throughout that vehicle's expected 4-year life. Both cars will be worthless at the end of their life. If 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 13 percent, calculate the EAC. Note: Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations. Round your answers to 2 decimal places.
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $23,500 to purchase and which will have OCF of −$3,100 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $32,000 to purchase and which will have OCF of −$1,600 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.) Scion EAC_____? Toyota EAC____?
Your firm has decided to test the use of EVs as upscale taxis. You are choosing between an Audi and a Polestar. The Audi has an initial cost of $65,000 and an expected life of five years. It will be depreciated straight - line over its expected life. The income expected from the Audi is $48,000 per year and maintenance and electricity are expected to run $22,000. The Audi is expected to be worth $10,000 at the end of its very busy life. The Polestar has an initial cost of $75,000 and an expected life of 4 years. It will be depreciated straight - line over its expected life. The Polestar is expected to generate revenue of $52,000 per year and have associated expenses of $26,000. It is expected to be worth $8,000 at the end of its 4- year life. Your marginal tax rate is 35% and your required rate of return for this test run is 10% . What is the EAA of the Audi?
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will
k You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Kia Rio, which will cost $17,000 to purchase and which will have OCF of -$1,800 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $25,000 to purchase and which will have OCF of -$950 annually throughout that vehicle's expected 4-year life. Both cars will be worthless at the end of their life. If 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 12 percent, calculate the EAC. Note: Negative amounts should be indicated by a minus sign. Do not round your intermediate calculations. Round your answers to 2 decimal places. EAC Rio EAC Prius Which one should you choose?
Consider the following situation, which involves two options. Determine which option is less expensive. Are there unstated factors that might affect your decision? You currently drive 275 miles per week in a car that gets 16 miles per gallon of gas. You are considering buying a new fuel-efficient car for $15,000 (after trade-in on your current car) that gets 54 miles per gallon. Insurance premiums for the new and old car are $1000 and $700 per year, respectively. You anticipate spending $1400 per year on repairs for the old car and having no repairs on the new car. Assume gas costs $4.00 per gallon. Over a five-year period, is it less expensive to keep your old car or buy the new car? Question content area bottom Part 1 Over a five-year period, the cost of the old car is $enter your response here and the cost of the new car is $enter your response here . Thus, over a five-year period, it is less expensive to ▼ buy the new car. keep your old…

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