Question: A car dealer presently leases a small computer with software for $5000 per year. As an alternative he could purchase the computer for $7000 and

A car dealer presently leases a small computer with software for $5000 per year. As an alternative he could purchase the computer for $7000 and lease the software for $3500 per year. Any time he would decide to switch to some other computer system he could cancel the software lease and sell the computer for $500. If he purchases the computer and leases the software,

(a) What is the payback period?

(b) If he kept the computer and software for 6 years, what would be the benefit-cost ratio, based on a 10% interest rate?

Step by Step Solution

★★★★★

3.45 Rating (177 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Lease A 5000yr Purchase a Payback Period Cost 7000 Benefit 150... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

7-B-E-M (253).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Janette created a microbrewery and named her popular beer, with a distinctive purple hue Purple Rainy. The beer was so popular, she began marketing and selling t-shirts and caps with the name Purple...

What is the payback period of each project? Year Project A Project B -S100 -S100 50 40 40 50 40 50 4 40

What is the payback period for the following set of cash flows? Year ______Cash Flow 0 .............. -$6,400 1 ................. 1,600 2 ................. 1,900 3 ................. 2,300 4...

A car dealer presently leases a small computer with software for $5000 per year. As an alternative he could purchase the computer for $7000 and lease the software for $3500 per year. Any time he...

Complete the following questions. I have attached both the chapters which you will be answering the questions from. Make sure to answer it thoroughly and specifically. Ch 10 (p 107 of text or p 41 of...

I have 2 case studies and one HW I need the answers with the steps please, I'm trying to past the possible image of the questions, to whom view the questions can you please zoom to see the questions...

MUST BE IN OWN WORDS FOR POINTS Analyze the Current Situation Identify the Strategic Managers "Case 30 Tesla Motors, as the first U.S. Car Company IPO Since 1956 Alan N. Hoffman Bentley University...

Montonya Company has the following selected data for the current year: Sales (10,000 units) $90,000 Direct materials 30,000 Direct labor costs 10,000 Variable manufacturing overhead 3,500 Fixed...

Need to give a few strategic decisions for the Role of VP- R&D - Tesla case study ESE Business School IES865 University of Navarra September 2021 Tesla in the 2020s: Moment of Truth for the "Master...

Write a MATLAB program to integrate using both the quad and quadL functions. To learn more about quadL, type help guadL at the MATLAB prompt. 2 sin ! dt

Steam is usually accelerated in the nozzle of a turbine before it strikes the turbine blades. Steam enters an adiabatic nozzle at 7 MPa and 500C with a velocity of 70 m/s and exits at 5 MPa and 450C....

3. LO.1 Eight years ago, Alex made gifts of all of his assets to family and friends. Although the transfers would have generated gift taxes, none were paid and no gift tax returns were filed. At...

sinr-sin 16. If x, yz are in A.P, then is zqual o cOs -cosx 3) siin y 4) cos y 1) tan y 2) cot y an B tan C+tan D 17. If A. B, C, D be the angles of a quadrilateral, then cot+cot R+oot C+cot ) 1) tan...

Occupational Fraud comes in many shapes and sizes. The fraud at Rite Aid is one such case. On February 10 th , 2015, the US Attorneys Office for the Middle District of Pennsylvania announced that a...

Consider the following Vectors: 3 -2 5 3 by> 4 9 %3D 3 5 -2 -4 -2 - 3 of an ordered basis of the Same 6 the sets Vaclas B - (b, , b, , b) and y.cc,a,c) cach form Subspace of then what is [x] ? Find...

Amber Mining and Milling, Inc., contracted with Truax Corporation to have constructed a custom-made lathe. The machine was completed and ready for use on January 1, 2021. Amber paid for the lathe by...

Consider the makie and the Vector -1-3 2.4 A> Xo = %3D 2.1 a) Solhe x't) = Ax , xc0) = X classify the orign an attractor, repelkr, or Saddle poin as %3D - Ax, , Xo given above . chasfy the origin as...

In recent years we have seen many major business scandals: the emissions-cheating scandal at Volkswagen, the employee exploitation scandal at 7-Eleven and the Turing Pharmaceuticals scandal where...

The market interest rate if is 12% per year compounded semiannually. For an inflation rate of 2% per 6 months, the effective semiannual interest rate is closest to: (a) 2% (b) 3% (c) 4% (d) 6%

Construction equipment has a cost today of $40,000. If its cost has increased only by the inflation rate of 6% per year, when the market interest rate was 10% per year, its cost 10 years ago was...

The amount of money that would be accumulated now from an investment of $1000 25 years ago at a market rate of 5% per year and an inflation rate averaging 2% per year over that time period is closest...

If $1000 is invested now, the number of future dollars required 10 years from now to earn a real interest rate of 6% per year, when the inflation rate is 4% per year, is closest to: (a) $1480 (b)...

If you expect to receive a gift of $50,000 six years from now, the present worth of the gift at a real interest rate of 4% per year and an inflation rate of 3% per year is closest to: (a) $27,600 (b)...

1. Suppose an investor decides to construct a portfolio consisting of a risk-free asset that pays 6 percent and a stock index fund that has an expected rate of return of 12 percent and a standard...