You work for a company that rents out cars. Your market company is the general public. You are assigned by your boss to look for two alternative cars that cost between 150 – 230 million in 2021. You are asked to determine which car the company should buy. The number of cars to be purchased is 200 cars. The assumption of buying using cash will be paid off immediately in 2021. All cars will be rented out to the general public on an annual basis at a price of 5% below the average car rental price. The company will only use the car for 5 years and after that it will be sold at a used price.
 

Look for two alternative cars that your boss asked for and look for them:

- New price in 2021

- Used price after 5 years. Please look for info on the price of the car brand in 2015 and how much is the used price in 2020, see how much it drops, then use that % as an assumption for the salvage value price in 2026

- What is the average yearly rental price for a car in 2021. Lower it by 5% and use that info for cash inflow. Look for the info through car sites.

- For interest rates, please use free assumptions

- For all data, please include the reference, if the assumption is valid, state why the assumption is like that. For example: Car X price in 2021: 180 million. Interest rate: 8% (why assume 8% interest rate)

Make an analysis using:

- Present Worth Analysis
- Annual Worth Analysis
Based on that analysis, which car should you buy?

Answer rating: 100% (QA)

After doing some research we have found two possible cars that the company could buy the Ford Mustan... View the full answer