What is the present value of the benefits of owning that car

Assignment Help Accounting Basics
Reference no: EM132561740

Question - You currently don't have a car, but rent a car that's parked just outside your house whenever you need one. Your annual expenditure on rental cars is $2,500.

You've now considering purchasing a car that would give you the same level of convenience as your current life style. The car costs $26,000 and can be sold for $5,000 after 10 years. You'd purchase the car with money from your savings account which always earns an interest rate of 6%.

Assume that all cash flows occur at the end of each year (maybe because you drive much more around Thanksgiving and Christmas).

What is the present value of the benefits of owning that car, i.e., saving on rental expenses and selling the car (answer 0+ decimal)? Should you buy the car?

Reference no: EM132561740

Questions Cloud

Explain the probability of a couples children : Explain the probability of a couples children having cystic fibrosis even though neither of them have the disease.
What is the ending inventory value at cost : Carla Vista Inc. uses the conventional retail method to determine its ending inventory at cost. What is the ending inventory value at cost
Explain the probability of a couples children : Explain the probability of a couples children having Cystic Fibrosis or being carriers for the CF gene.
Is an important consideration in capital budgeting : Currently due, Is this an important consideration in capital budgeting? Justify your answer. Explain three limitations of the payback method.
What is the present value of the benefits of owning that car : What is the present value of the benefits of owning that car, i.e., saving on rental expenses and selling the car (answer 0+ decimal)? Should you buy the car
Breifly explanation dna and chromosomes : Breifly explanation DNA and chromosomes, genes, and dominant and recessive alleles of these topics in plain, non-technical language.
Calculate the net present value of new manufacturing plant : Calculate the net present value of the new manufacturing plant.
Human evolution now than 30-50 years ago : Why is it more important for scientist to understand human evolution now than 30-50 years ago?
Complete the company residual income for the year : Complete the company's residual income for the year. Juniper Design Ltd. of Manchester, England is a company specializing in providing design services

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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