Make a decision on replacing its garbage truck

Assignment Help Financial Management
Reference no: EM131578566

The Town of Millbridge has to make a decision on replacing its garbage truck. It has narrowed the choice down to two different models. Model A will initially cost $80,000 and then will cost $5,000 per year to operate for its 20-year life. Model B will initially cost $100,000 and then will cost %2,500 per year to operate for its 30-year life. Use the annualized cost approach to determine which is a better choice. Assume a discount rate of 5 percent year year.

Reference no: EM131578566

Questions Cloud

Discuss kansas city preventive patrol experiment : the Kansas City Preventive Patrol Experiment as your example, discuss how this landmark experiment lived up
Describe two key factors in the organizations environment : Describe two key factors in the organization's external environment that can affect its success. Provide explanation to support the rationale.
Expected return-standard deviation of return on portfolio : Find the expected return and the standard deviation of the return on a portfolio consisting of 15% of asset X and 85% of asset Y.
Discuss findings in respect to using queries : Discuss your findings in respect to using queries (sorting and filtering data) and macros; explore your experiences.
Make a decision on replacing its garbage truck : The Town of Millbridge has to make a decision on replacing its garbage truck. It has narrowed the choice down to two different models.
Dysfunctional way of addressing social ills : dysfunctional way of addressing social ills that would be better handled in other ways
What is the primary market and what is warrant : What is the primary market? What is warrant? And If you Have a Warrant Should You be Disturbed?
Express your personal views on the given topic : In the final paragraph of your posting, express your personal views on this topic: protectionism or free trade.
The value of equity after the recap : Nichols Corporation's value of operations is equal to $500 million after a recapitalization. What is S (the value of equity after the recap)?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the yield to maturity of bond

A Japanese company has a bond outstanding that sells for 93 percent of its ¥100,000 par value. The bond has a coupon rate of 6 percent paid annually and matures in 16 years. What is the yield to maturity of this bond?

  Mortgage loan-what is effective annual rate

You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 35-year mortgage loan for 85 percent of the $2,500,000 purchase price. The monthly payment on this loan will be $16,600. what is effective annual rate?

  What is the value of this annuity today if the discount rate

Tara Knowles buys an annuity that will pay her $24,000 a year for 25 years. The payments are paid on the first day of each year. What is the value of this annuity today if the discount rate is 8.5 percent?

  Equivalent annual worth of project with an initial cost

Which of the following is closest to the equivalent annual worth of a project with an initial cost of $8,000, annual maintenance costs of $350 and a salvage value of $2,000? Assume an interest rate of 8% per year and that the project has a 8-year lif..

  Calculate the cost of equity using the sml method

Berta Industries stock has a beta of 1.25. The company just paid a dividend of $0.40, and the dividends are expected to grow at 5 percent. The expected return on the market is 12 percent, and Treasury bills are yielding 6.1 percent. The most recent s..

  What is project net present value

A project has an initial investment of $1,500,000. If the expected cash inflows from the project are $600,000 in year 1, $342,000 in year 2, $255,000 in year 3, and $375,000 in year 4, what is the project’s payback? If the firm’s hurdle payback rate ..

  Callable bond with an annual coupon rate

Assume that you are considering the purchase of a 20-year, non callable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semi annual interest payments. If you require an 8.4% nominal yield to maturity on this..

  Calculate net swap payment-indicating with party pays it

Consider a $100 million equity swap with semiannual payments. When the swap is established, the underlying stock is at 1,215.52. One party pays a fixed rate of 5.5% based on the assumption of 30 days per month and 360 days per year. If the stock inde..

  Is this mortgage conventional mortgage

You are considering buying a house close to the university so that you can devote more time to your academic career. You have estimated that you can afford $3500 per month as a mortgage payment because you plan to rent rooms out to your friends. What..

  Estimating its cost of capital

Dakota Chemical Inc's dividend yield is 2%. The company pays an 8% interest rate on loans. Dakota is estimating its cost of capital. Can we use 8% as the c?ost of capital? Why or why not? Do you conclude that the cost of equity is lower than the cost..

  Compute the amount that couple deposited into account

Compute the amount that the couple deposited into the account when they opened it

  Sufficient funds to pay cash for entire expansion project

Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $169.47 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd