What is the present value of costs under option a

Assignment Help Business Economics

Reference no: EM13159346

Fran runs a small delivery service. The borrowing and deposit rates of interest are identical for her. Her only inputs are her time, gasoline, and a very specialized delivery truck. The truck is so specialize to her needs that it has no scrap value. The price of a new truck is $45,000. As one of these trucks ages, maintenance gets more expensive. The required maintenance at the end of year one costs $3,000, and the maintenance cost increases each year by $3,000: at the end of year two it is $6,000, at the end of year three it is $9,000, and so on. She plans to stay in the business for just seven more years. Because her current truck is now exactly three years old, she must now spend $9,000 on maintenance. She is considering two options: option A, using her current truck for the next seven years; and option B, buying a new truck today, and using it for the next seven years. (a)* What is the present value of costs under option A? Under option B? Which is the better option? (b)* Given that she is going to stay in business for another seven years, should she be considering other options?

Reference no: EM13159346

Questions Cloud

Each cycle in an instruction cycle : Suppose each cycle in an instruction cycle takes an average of 5 clock cycles. Determine the number of clock cycles needed to process 10 instructions without and with a pipeline

Will ralph increase or decrease the number of hours : If the wage rate for his primary job increases to $22 per hour, will Ralph increase or decrease the number of hours he works in the secondary job?

Notions of karma-samsara and nirvana : Explain and evaluate the notions of Karma, samsara, and Nirvana. Explain and evaluate the Hindu ideas of Brahman, atman and reality.

Faculty and minority : Should members of the administration be called to have as large of a role as faculty members with respect to changing how a campus “feels” toward minority individuals? Please support your answer.

What is the present value of costs under option a : What is the present value of costs under option A? Under option B? Which is the better option? (b)* Given that she is going to stay in business for another seven years, should she be considering other options??

Write the logical expression in postfix notation. : Given symbols p, q, r, and s for propositions. Draw the binary tree representation of the logical expression ((p || r) && ! p ) || s) && (q || r). Write the logical expression in postfix notation.

Calculate the average variable cost for brian and kims firm : Calculate the following for Brian and Kim's firm

What are the wobble rules : What are the major proofreading steps during the process of translation? (hint: we talked about two different steps in which proofreading is involved) What might happen if one or the other are not functioning correctly?

Why are bacterial genes often arranged in operons : What are the ways that bacteria can "control" when and how much RNA is made? (hint: there are at least 3 very different ways)

User Account

All Pages