Using the net present value for indicative annual mileage

Assignment Help Business Economics
Reference no: EM131171068

For long distance transport of your expensive electronic products your company is leasinga cargo-plane for $150,000 per year. Your annual costs depend on the miles of flights andthey are directly proportional to them at a cost of $5 per mile.

You have received an offer to purchase an airplane

- Initial investment of $1,000,000.

- The lifespan of the airplane is 8 years at which time it can be scrapped for $150,000.

- At 5 years a major maintenance of cost $150,000 will be required. Obviously at the end you do not have to perform maintenance.

- Due to its technological improvements the cost per mile is $4.6.

Evaluate the proposed offer using the net present value for an indicative annual mileage of 120,000 miles.

What is the Internal Rate of Return of the purchase versus the continuation of the lease? Do you recommend it? The discount interest rate (MARR) for the evaluation of the investments is set to 4%.

PLEASE SHOW AND BE SPECIFIC WITH DETAILS.

Reference no: EM131171068

Questions Cloud

What other strategies or leadership skills might you use : What other tools/strategies or leadership skills might you use? What cultural competencies might you draw upon to help you engage families in this process? How might you persuade other organizations to help encourage family participation?
Explore the moral ambiguity in the stories you have read : Explore the moral ambiguity in the stories you have read for this unit ("Young Goodman Brown" "The Minister's Black Veil" and "Rappaccini's Daughter"). How do they affect the reader's ability to discern "good" and "evil" characters?
Description of supply and demand : 1. Explain Opportunity Cost and provide an example. 2. What is the difference between absolute advantage and comparative advantage? What is the benefit of trade? 3. Provide a brief description of supply and demand. How is equilibrium used to determin..
Write a paper on service operation management : Select any service organization with which you are familiar. Write a paper about it with the following sections:1. Introduction - Give a brief overview of the company including its services, location & history.
Using the net present value for indicative annual mileage : For long distance transport of your expensive electronic products your company is leasinga cargo-plane for $150,000 per year. Your annual costs depend on the miles of flights andthey are directly proportional to them at a cost of $5 per mile. Evaluat..
Functional dependencies logically : The first 2 questions use the schema R = (A,B,C,D,E) and the set F of functional dependencies:
Describe and summarize your selected detection : Describe and summarize your selected detection, inspection, or surveillance technology that could be used to increase law enforcement agency capabilities.
At the profit-maximizing output level for monopolist : At the profit-maximizing output level for a monopolist, which of the following statements is (are) NOT true?
What jewish festival celebrates liberation of israelites : Judaism traces its origins back to this patriarch in the book of Genesis: What Jewish festival celebrates the liberation of the Israelites from Egypt (cf. Exodus)?

Reviews

Write a Review

Business Economics Questions & Answers

  What sort of behavior might be encouraged by moral hazard

For each of the following kinds of insurance, explain briefly what sort of behavior might be encouraged by moral hazard:

  Two goods in the economy-video games and water

Assume that there are only two goods in the economy: video games and water. The total amount of these goods are given, there is no production. The world is inhabited by two people: Ann and Bob.

  Marginal cost is constant across firms

What happens to price and output in the Cournot, Bertrand, and Stackelberg models if marginal costs increase by 10 percent? The market demand is p = a-bQ and the marginal cost is constant across firms, i.e. mc1 = mc2 = c. You may consider for two fir..

  What is the equilibrium price and quantity consumed

Costa Rica is a “small” country and assumed to be unable to affect world prices. It imports blueberries at the price of 10 dollars per box. The Domestic Supply and Domestic Demand curves for boxes are: S = 60 + 20P D = 1160 − 15P Assume Costa Rica is..

  Use the sticky wage theory of aggregate supply

Use the sticky wage theory of aggregate supply to explain what will happen to output and the price level in the long run. What role does expected price level play in the adjustment?

  Financial burden an anomalous catastrophic event

As our texts indicates, a "loss ratio" can be used to measure an insurer's financial well-being as it reflects the percentage of premiums being used to pay covered losses. Imagine you were the CEO of The Best Insurance Company, Inc. Given what you no..

  What is your expected utility if you reach your sales goal

What is your expected utility if you reach your sales goal 50% of the time? b.Suppose the sales goal was lowered so that you meet it 60% of the time.

  What will happen if oil prices remain in the range

According to Global Insight, a Massachusetts economics consultancy, what will happen if oil prices remain in the range of $65 to $70 per barrel for a couple of more months?

  Equilibrium output level and equilibrium interest rate plus

Utopia is described by the following equations: C=80+0.75Y I=115-10r T=20+0.2Y M=20+0.05Y G=200 X=100 Money supply=450 L=110+0.55Y-10r F= -60+2r B= F+X-M Calculate: (a) Equilibrium output level and the equilibrium interest rate plus the position on t..

  What is the future worth of the project

A project has a first cost of $10,000, net annual benefits of $2,000 and a salvage value of $3,000 at the end of a ten year useful life. What is the future worth of the project if MARR = 10%?

  Reason for governments to regulate business operations

Which of the following is a possible reason for governments to regulate business operations?

  Q suppose that the total stock s0 of a nonrenewable

q. suppose that the total stock s0 of a nonrenewable resource is 15 units. the quantity demanded of the resource in

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