Salvage value is expected to original cost for either model

Assignment Help Business Economics

Reference no: EM13838650

XBC Inc. is planning to buy a new car. Model A costs $22,000 and is expected to have a life of 4 years. Model B costs $35,000 but it is expected to last 6 years. Model B provides a better warranty and it will save the company an average of $1,000 per year in covered costs. At the end of its life, either car can be replaced with a similar model at the same cost. The salvage value is expected to be 10% of original cost for either model. Using annual worth analysis and an interest rate of 5% per year, determine the better buy.

Reference no: EM13838650

Questions Cloud

What MARR does the investment represent : A college graduate with a B.S. in Mechanical Engineering expects to earn, on average, $20,000 per year more than an engineer without a B.S. degree. what MARR does the investment represent? Is it a high or low rate of return compared to, say a student..

Stackelberg and cournot competition : Apple put on the first smartphone, making them the Stackelberg leader. Samsung, HTC and Sony release their smartphones some time later. Consider the market competition game between these three companies. Characterize the output level for each firm an..

Calculate the price elasticity of demand of gasoline : Explain how you would calculate the price elasticity of demand of gasoline? In general terms, explain how consumer and producer surplus will change as a result of this price increase?

Money performing-medium of exchange-store of value : Your article shows money performing (or failing to perform) at least one of the following functions: (a) medium of exchange, (b) store of value, or (c) standard of value. What is the particular form of money (M1, M2, etc.) that would be the smallest ..

Salvage value is expected to original cost for either model : XBC Inc. is planning to buy a new car. Model A costs $22,000 and is expected to have a life of 4 years. Model B costs $35,000 but it is expected to last 6 years. The salvage value is expected to be 10% of original cost for either model. Using annual ..

Calculate the present value of annuity with annual deposits : Calculate the present value of an annuity with annual deposits of $10,000 at 7% for 10 years. Determine the monthly payment to amortize a $250,000 debt at 3% for 30 years.

What is the capitalized cost of the marina : An investor is considering the construction of a new marina on the Detroit river at a cost of $68m. M&O costs will average $80,000 per year for the first five years, and rise to $100,000 per year thereafter. A major overhaul costing $12m will be requ..

Equilibrium wage rate in the teen labor market : The state if Arizona decided to boost its own minimum wage rate by $1.60/hr.This pushed the wage rate earned by Arizona teenagers above the equilibrium wage rate in the teen labor market. What is the predicted effect of this action by Arizona’s gover..

Government of nation established price support for wheat : The government of a nation established a price support for wheat. The government’s support price has been above the equilibrium price each year since, and the government has purchased all wheat over and above the amounts that consumers have bought at..

User Account

All Pages