Should the firm buy the 10trucks if real interest rate given

Assignment Help Econometrics
Reference no: EM13222591

Acme Landfill Company is considering the purchase of 10 better trash collection trucks. Each truck costs $50,000 and will last 7 years. the firm estimates that the entire purchase will increase its annual total annual revenues by $100,000 per year for as long as the trucks last.

a) If the real interest rate is 10%, should the firm buy the 10 trucks?

b) Would your answer to part a change if the interest rate fell to 8%? Show your calculation and briefly explain as necessary.

Reference no: EM13222591

Questions Cloud

How much should be withdrawn at the end of period : $4,000 were deposited at time 0 in an account that pays an interest of 10% compounded annually. how much should be withdrawn at the end of period 2 to have $4,000 at the end of period 4 available in the account
How to reduce the molality : How many grams of water would you add to 1.00 kg of 1.34 m CH3OH to reduce the molality to 1.00 m CH3OH
Explain a solution is to change the temperature : One way to recrystallize a solute from a solution is to change the temperature. Another way is to evaporate solvent from the solution. A 340 g sample of a saturated solution of KNO3 in water is prepared at 25.0.
What price-quantity combination maximizes revenue : You are the manager of a monopoly, and your demand and cost functions are given by P = 200 - 2Q and C(Q) = 2000 + 3Qsquared, respectively. a. What price-quantity combination maximizes your firm's profits b. Calculate the maximum profits.
Should the firm buy the 10trucks if real interest rate given : Acme Landfill Company is considering the purchase of 10 better trash collection trucks. Each truck costs $50,000 and will last 7 years. the firm estimates that the entire purchase will increase its annual total annual revenues by $100,000 per year..
Clarify the warranty coverage and cost : A 50-person office needs a new color printer to prepare high-speed, multi-page reports for staff projects. The printer must be able to handle both high quality and draft quality color printing back-to-back pages.
Explain the rf values changed when the eluant was change : Explain why the Rf values changed when the eluant was changed from 100% petroleum ether to a 95:5 mixture of petroleum ether-ethyl acetate. Why UV light is not a useful visualization technique in every circumstances?
Explain the specific heats of solid and liquid ethanol : Ethanol melts at -114 C and boils at 78 C. The enthalpy of fusion of ethanol is 5.02 kJ/mol, and its enthalpy of vaporization is 38.56 kJ/mol. The specific heats of solid and liquid ethanol are 0.97 J/g.K and 2.3 J/g.K, respectively.
What is the arrival rate for each team : What is the utilization rate of a clinician? (Round your answer to 4 decimal places.)

Reviews

Write a Review

Econometrics Questions & Answers

  What is the welfare effect of piracy

A monopoly sells music CDs. It has a constant marginal and average total cost of $20. It faces two groups of potential customers: honest and dishonest people. The dishonest and honest consumers' demand functions are the same,Qh = Qd = 120 - P.

  How many units will this firm produce in the short-run

Given below are the cost schedules for a perfectly competitive firm. Average Average Variable Total Marginal Quantity Cost Cost Cost 1 $ 50 $ 90 $ 50 2 45 65 40 3 40 53 30 4 35 45 20 5 34 42 30 6 35 41 40 7 37 43 50 8 40 45 60

  Define the inventory level vs time for a reasonable number

A company has an annual requirement for 150,000 parts, which cost $125 each. The parts require processing having a $4,000 setup cost. Each part occupies 0.5 sqft of floor space in the factory. Floor space has a total cost of $12.50 per square foot..

  Determine price of soda pop sold at your stand in dollars

Amalgamated Popcorn, Inc. is a fairly small firm selling bags of flavored gourmet popcorn in a popular mall. As shop owner and operator, you have observed that your daily sales tend to follow a pattern that can be stated as: QP = 500 - 100PP + 1.2..

  Find the size of the labor force in a community

The size of the labor force in a community is 800, and 720 of these folks are gainfully employed. In this community, 200 people over the age of 16 do not have a job and are not looking for work. In addition, 100 people in the community are under t..

  Determine total profits for each firm at equilibrium output

Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P = 600 Â- Qc- Qd Where Qc and Qd are the quantities sold by the respective firms and P i..

  How many used textbooks will fastidious students buy

To save money, they can put up with some marks and stains. The frugal students are only willing to pay a premium of $8 for a new book instead of a used book. The remaining 300 students are fastidious about their textbooks.

  What is interest rate on bonds in asset market equilibrium

Mr. Midas has wealth of $100,000 that he invests entirely in money (a chequing account) and government bonds. He instructs his banker to invest $50,000 in bonds, plus $5,000 more in bonds for every percentage point that the interest rate on bonds ..

  Compute the ae in the economy of timberland

After this change, the interest rate is found to be below the equilibrium interest rate. Describe the effect of this level of interest rate on the price of bonds, the need for cash balances, the opportunity cost for holding money.

  Will an airline be likely to raise price for both groups

Suppose that business travelers and vacationers have the following demand for airline tickets from New York to Boston: Price Quantity Demanded Quantity Demanded for business travelers for Vacationers 150 2,900 1,000 200 2,700 750 250 2,550 550 300 2,..

  Why inc engages in third degree price discrimination

The marginal cost (which equals the average variable cost) of serving an additional patron, either senior or everyone else, is equal to $4. Fixed costs are equal to $1000.Ps = 80 - Qs Pe = 100 - 2Qe Show that MRe = MRs = MC

  What would affect decision in part a to purchase a machine

The Textile Workers of America is planning to strike for higher wages. Management predicts that if the strike is successful, the cost of labor will increase to $100 per day. If the strike is successful, how would this affect the decision in part a..

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