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Warner Cable Company needs to replace 5 vehicles in its 50 vehicle fleet. Warner is considering two different types of vehicles: a higher cost, higher gas mileage vehicle (Vehicle Type HC) or a lower cost, lower mileage vehicle (Vehicle Type LC). The maintenance costs for the vehicles are similar. The cost for Vehicle HC is $35,000 and the cost for Vehicle LC is $28,000. Vehicle HC gets an average of 43 miles per gallon, and Vehicle LC gets an average of 25 miles per gallon. Warner plans to finance the purchase over a 4 year period, and the vehicles should last 8 years. The resale value of the vehicles after 8 years is estimated to be 10% of the original purchase price. Assume the average cost per gallon of gas over the 8 year period is $4.20; also assume that each vehicle is driven the same number of miles over the 8 year period. 1. What is the monthly payment for each type of vehicle (use interest rate of 6%)? 2. What is the total purchase cost for each type of vehicle? 3. What is the estimated fuel cost if each vehicle is driven 5,000 miles annually? 4. What is the estimated fuel cost if each vehicle is driven 30,000 miles annually? 5. Which vehicle type should Warner purchase? Justify your answer. 6. Summarize this scenario.
AndyCoi Inc has the following balance sheet and an equity of market to book ratio of 1.5 assuming the market value of debt equals its book value, what weights should it use for WACC calculation?
Due to new air pollution standards, a company needs to invest in a new $150,000 environmental control technology. They have two options: either take out a loan or to purchase it themselves. a) If the company chooses to borrow the $150,000 from a bank..
The 2013 balance sheet of Maria's Tennis Shop, Inc., showed $670,000 in the common stock account and $5.9 million in the additional paid-in surplus account. The 2014 balance sheet showed $705,000 and $6.8 million in the same two accounts, respectivel..
During the early stages of the learning curve, firms sometimes establish a price for their products that is lower than their actual costs, in anticipation of lower costs later on, after significant learning has occurred. This activity is called “forw..
Wilderness Adventures has earnings per share of $2.45 and dividends per share of $1.05. The total equity of the firm is $850,000. There are 40,000 shares of stock outstanding. What is the sustainable rate of growth?
Consider a project with the following data: accounting break-even quantity = 7,440 units; cash break-even quantity = 6,800 units; life = five years; fixed costs = $170,000; variable costs = $40 per unit; required return = 12 percent. Ignoring the eff..
Centralized control over disbursements is assisted by which of the following cash management techniques?
the report have to be word processed use meggitt company latest annual report and accounts200520062007200820092010 to
Now that the board members of Felicia & Fred are planning to implement a new crystal jewelry product line, they are concerned about potential shareholder sentiment regarding the dilution of ownership interest. What is the likely effect on the weighte..
Nordyne inc.'s marketing sales director doesn't think that the market for the firm's goods is big enough to sell enough units to make the company's target operating profit of $20,000,000. in fact, she believes that the firm will be able to sell only ..
The following data apply to Saunders Corporation: Saunders Corporation currently has 1,000,000 common stocks outstanding. It considers raising $10 million through issuing 20-year 8% coupon bonds – annually paid - with 12 warrants. Each bond has a fac..
Anron corporation paid a dividend today of $3.50 per share, and the dividend is expected to grow at a constant rate of 6% per year. If Anron stock is selling for $61.83 per share, the stockholders' expected rate of return is:
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