Question: (Quantitative Question) Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other.
(Quantitative Question) Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts much longer than the other. Its discount rate is 9%. It plans to continue with one of the two models for the foreseeable future. The purchase and maintainance costs of the two machines are given below Model/Time (yrs) 11 2 13 5. 17 Old Reliable -200 4 4 -4 4 4 Short and Sweet -100 2 2 a. What is the equivalent annual annuity (of costs) for Old Reliable? (Round to 2 decimal places) b. What is the equivalent annual annuity of costs) for short and Sweet? (Round to 2 decimal places) c. Based on the costs of each model, which should Gateway Tours cuhoose? Write your answers both in the spaces above and on the empty pages on which you will show your work for each part (including a timeline for parts a and b)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
