You are considering buying a new car with a part of your

Assignment Help Macroeconomics

Reference no: EM13378106

You are considering buying a new car with a part of your student loan dollars as you really do not need the extra cash now. You have two alternatives with the following cost structures.
Speedy
Initial cost = $20,000
Annual operating cost = $8,000 Useful life = 5 years
Salvage = $2,000
Turbo
Initial cost = $16,000
Annual operating cost = $6,000 Useful life = 4 years
Salvage = $1,500

You want to evaluate these using only economic criteria. Ignore the impact of taxes and you will pay cash for the car.
a. Which criterion should you use and why? What are you assuming about implementing the projects when you use this criterion?
b. Given that MARR = 10%, which alternative should you choose?
c. Assume that MARR is 10%. If you can get a car loan at 8% per year, would you take the loan or use your cash.

Reference no: EM13378106

Questions Cloud

1 in the past the roils royally engine division roils : 1. in the past the roils royally engine division roils allocated indirect manufacturing costs based on direct labour

A country is described by the solow model with a production : a country is described by the solow model with a production function y k12 where y is output per worker and k is

In a recent speech the governor of your state announced one : in a recent speech the governor of your state announced one of the biggest causes of juvenile delinquency in this state

1 audiofile products ltd is a retailer that sells sound : 1. audiofile products ltd. is a retailer that sells sound systems.nbsp the company is planning its cash needs for the

You are considering buying a new car with a part of your : you are considering buying a new car with a part of your student loan dollars as you really do not need the extra cash

1 a company purchased equipment for 20000 management : 1. a company purchased equipment for 20000. management estimates that the equipment will have a useful life of five

What is your price elasticity of demand for gasoline and : what is your price elasticity of demand for gasoline and why? how important is fuel efficiency to you particularly if

The classical economists held that the rate of interest : the classical economists held that the rate of interest would equate planned investment and planned saving so that all

According to classical economists the aggregate supply : according to classical economists the aggregate supply curve isa.vertical in both the long run and the short runb.

User Account

All Pages