You are trying to pick the least-expensive car for your new delivery service. You have two...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66493453be14e_5556649345313097.jpg)
Transcribed Image Text:
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Kia Rio, 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. 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? You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Kia Rio, 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. 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?
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Based on Exhibits 5 and 6, the value of the lower one-period forward rate is closest to: A. 3.5122%. B. 3.5400%. C. 4.8037%. Meredith Alvarez is a junior fixed-income analyst with Canzim Asset...
-
How often should standards be revised? Discuss.
-
Discuss how you would use team building to improve the effectiveness of a team you are playing on or have played for.
-
(PV perpetuity, finding r) A fund of $10,000 is set up to pay $250 at the end of each year indefinitely. What is the funds rate? (Theres no Excel function that answers this questionuse some logic!)
-
A researcher uses multiple regression to predict a clients sales volume based on gross domestic product, personal income, disposable personal income, unemployment, and the consumer price index. What...
-
Assume a zero-coupon bond that sells for $272 will mature in 15 years at $1,300. UseAppendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator...
-
Find the integral. (Use symbolic notation and fractions where needed. Give your answer in terms of cotangent and tangent. Use C for the arbitrary constant. Absorb into C as much as possible. ) (21) +...
-
Materials Control Work-in-Process Control Finished Goods Control 100 60 500 Required 1. Prepare an overview diagram of the job-costing system at the University of Chicago Press. 2. Prepare journal...
-
Write a C++ function named permute that accepts an unsigned integer (32 bit) as input and returns an unsigned int (32 bit) using the permutation function P off-function of DES. The permutation table...
-
The importance of an effective incident response and disaster recovery plan is emphasized. Why do you think many organizations still neglect to develop and implement these plans until after a...
-
For a boat to float in a tidal bay, the water must be at least 2.7 meters deep. The depth of the water around the boat, d (t), in meters, where t is measured in hours since midnight, is d(t)=5+4.6...
-
4. Comparative analysis on the key differences and similarities between USA & CHINA: [USE and DEFINE relevant theories/concepts/frameworks from the relevant sources to perform a comparative analysis...
-
Which section of the Act contains most of the definitions that apply to the Income Tax Act
-
Cobb Manufacturing Company uses a process cost system and average costing. The following production data is for the month of June 2011. Production Costs Work in process, beginning of the month:...
-
Can an organization have innovation without creativity?
-
interpret the difference between disruptive innovation and sustaining innovation.
-
What two factors encourage the diffusion of an innovation? Why? What can be done to encourage these two factors?
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App