Your boss has asked you to look into optimizing the van ownership strategy for your company....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Your boss has asked you to look into optimizing the van ownership strategy for your company. The company you work for bought a van for $54,600 for making deliveries. You expect the van to be driven 27,300 miles per year, with each mile costing you around $0.63 per mile in the first year. The operating cost per mile is expected to increase by 5% per year after the first year. The resale value of the van is expected to decrease by 20% in the first year and then by 7% per year from there on out. What is the optimal ownership period (economic life) in years assuming a MARR of 9%? 4 years 5 years 7 years 3 years 6 years 2 years 8 years Your boss has asked you to look into optimizing the van ownership strategy for your company. The company you work for bought a van for $54,600 for making deliveries. You expect the van to be driven 27,300 miles per year, with each mile costing you around $0.63 per mile in the first year. The operating cost per mile is expected to increase by 5% per year after the first year. The resale value of the van is expected to decrease by 20% in the first year and then by 7% per year from there on out. What is the optimal ownership period (economic life) in years assuming a MARR of 9%? 4 years 5 years 7 years 3 years 6 years 2 years 8 years
Expert Answer:
Answer rating: 100% (QA)
T A BA1009T CB D ED1009T FC54600E G1AP 009 T HFG End of year OM Costs Present Worth of OM Cost Cumul... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259024900
9th canadian edition
Authors: Ray Garrison, Theresa Libby, Alan Webb
Posted Date:
Students also viewed these computer network questions
-
Your boss has asked you what amount she must invest today at 8% interest so that she will have $350,000 available to pay off a lump-sum debt that comes due in 32 years. In other words, what is the...
-
Your boss has asked you to analyze and report on your division's sales for the first nine months of this year. Using the following data from company invoices, calculate the mean for each quarter and...
-
Your boss has asked you to estimate the intrinsic value of the equity for Google, which does not currently pay any dividends. You are going to use an income approach and are trying to choose between...
-
The strike price of a compensation option is generally set on the day the option is issued. On November 10, 2000, the CEO of Analog Devices, Jerald Fishman, received 600,000 options. The stock price...
-
Barts Company has prepared the fixed asset and depreciation schedule shown in Exhibit DC13-2. The following information is available: The land was purchased eight years ago when Building 1 was...
-
The Gray family is moving into a new home and they are using a wooden ramp to roll furniture over the stairs at the entrance. The ramp, AB, is shown over the staircase in the diagram. a. How far is...
-
For a random sample of 20 automobile models, we record the value of the model as a new car and the value after the car has been purchased and driven 10 miles. The difference between these two values...
-
Fuji Software, Inc., has the following mutually exclusive projects. a. Suppose Fujis payback period cutoff is two years. Which of these two projects should be chosen? b. Suppose Fuji uses the NPV...
-
The following information is available for Blue Corp. for the year ended December 31, 2022: Other revenues and gains. $11,100 Sales revenue $616,000 Other expenses and losses 14,000 Operating...
-
Coverall Inc. produces and sells a unique type of case for a standard size tablet computer that is guaranteed waterproof but still allows for regular functionality of the tablet. The company has just...
-
A construction worker Bob is standing at the top of a slanted rooftop when he accidentally drops an orange from his lunch bag. The orange rolls down the roof, which is angled at 0= 26.7 to the...
-
The three major classifications of activities in a cash flow statement are: A. inflows, outflows, and net flows. B. operating, investing, and financing. C. revenues, expenses, and net income.
-
Which of the following choices best describes reasonable conclusions an analyst might make about the companys solvency? A. Comparing FY14 with FY10, the companys solvency improved, as indicated by an...
-
An analyst observes a decrease in a companys inventory turnover. Which of the following would most likely explain this trend? A. The company installed a new inventory management system, allowing more...
-
Which inventory method is least likely to be used under IFRS? A. First in, first out (FIFO). B. Last in, first out (LIFO). C. Weighted average.
-
White Flag, a womens clothing manufacturer, reported salaries expense of $20 million. The beginning balance of salaries payable was $3 million, and the ending balance of salaries payable was $1...
-
Salsa corporate has the following capital structure. Its corporate tax rate is 30%. What is its Weighted Average Cost of Capital (WACC)? Make sure you show all the workings to score all the step...
-
If the amplifier indicated by the box input impedance of oo, which of the following statements are true ? has an open loop gain as well as Feedback factor (\beta = 1/ R_1\) The feedback is voltage...
-
Why are overhead rates in ABC based on the level of activity at capacity rather than on the budgeted level of activity?
-
Senatory Limited produces several products from processing krypton, a rare mineral. Material and processing costs total $30,000 per tonne; one-third of the costs are allocated to the product...
-
Many organizations focus their strategy on providing high-quality customer service and consequently place metrics concerning customer relationship management on their balanced scorecards. Consider...
-
Example In January 2004, a Mars Exploration Rover touched down on the surface of Mars and rolled out for exploration ( Figure
-
Does the snowflake have rotational symmetry in Figure 1.6? If yes, describe the ways in which the flake can be rotated without changing its appearance. Does it have reflection symmetry? If yes,...
-
A battery-operated wall clock no longer keeps timeneither hand moves. Develop a hypothesis explaining why it fails to work, and then make a prediction that permits you to test your hypothesis....
Study smarter with the SolutionInn App