Your business is considering the selection of hybrid trucks as an alternative to conventional gasoline powered trucks. Based on the following data, should the hybrid trucks be selected over conventional? Use incremental rate of return analysis. Hybrid $48,000 Conventional Up front cost Miles per gallon Cost of fuel Miles per year Life (years) Salvage Value MARR $40,000 12 18 $4.00/gal $4.00/gal 18,000 5 18,000 $20,000 $24,000 15% 15%

Your business is considering the selection of hybrid trucks as an alternative to conventional gasoline powered trucks. Based on the following data, should the hybrid trucks be selected over conventional? Use incremental rate of return analysis. Hybrid $48,000 Conventional Up front cost Miles per gallon Cost of fuel Miles per year Life (years) Salvage Value MARR $40,000 12 18 $4.00/gal $4.00/gal 18,000 5 18,000 $20,000 $24,000 15% 15%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Give typing answer with explanation and conclusion Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $3,700 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $36,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $4,400 each. If your cost of capital is 12 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)
A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available. Gasoline $31,000 3 years $8,000 $0.41 Initial investment Useful life Salvage value Operating cost per mile a. With interest at 4% per year, determine the annual mileage at which the two trucks are equivalent. . For 17,000 miles per year in travel, which truck should be recommended? Click the icon to view the interest and annuity table for discrete compounding when /-4% per year. The annual mileage at which the two trucks are equivalent is miles. (Round to the nearest whole number) Diesel $23,000 2 years $5,000 $0.33
Q3.In automobile industry there is a growing demand for electrical vehicles, in the present era, conduct an analysis on any commercially available electrical vehicle being used, consider initial investment, annual costs( operation costs/maintenance costs), salvage value, revenue if any with usage and find out whether buying an electric car is preferable or not over a conventional automobile which runs on fuel.(prepare estimate for conventional fuel run car and electrical car and evaluate which one is profitable using any project evaluation method of your choice). Discuss with an inference which one is preferred(Prepare for at least 3 years)
What is the crossover point in miles between the hybrid vehicle and the alternative vehicle from a competing auto manufacturer? Alternative Vehicle Hybrid Vehicle $19,500 $0.10 Vehicle Purchase Cost $17,500 Vehicle Purchase Cost Vehicle Operating Cost per Mile Useful Life of Vehicle $0.14 Vehicle Operating Cost per Mile Useful Life of Vehicle 15 years 16,000 15 years 16,000 Miles per Year Miles per Year 31 Miles per Gallon 36 Miles per Gallon $3.68 Average Fuel Price per Gallon $3.68 Average Fuel Price per Gallon The crossover point, M, is miles (round your response to the nearest whole number).
An engineering company is evaluating two different options for buying a triaxial testing machine. The expected cash flow for two different options and other required data are given in Table. By considering data given in Table, which option should be preferred by the engineering company. Give all calculation steps. First Cost (TL) Annual Operating COsts (TL) Annual Revenue (TL) Salvage Value (TL) Economic Life (TL) Option A 120000 14000 50000 30000 5 Option B 150000 10000 60000 350000 5 Interest Rate - 0.05 Discount Rate - 0.05
3. Grade Motor Co. is considering two different makes of blow molding machine for one of its automotive products. The cost data for the two alternatives are provided in table below. MARR=12. Using IRR analysis, state which equipment should be bought. Use 12% as the initial guess for IRR. Initial cost Annual operating cost Benefits/Year Salvage value Life Equipment X Equipment Y $160K $285K 45K 90K 20K 10 Years 45K 105K 40K
You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 13% per year? Why is yours the correct choice? Alternative First Cost X $-45,000 Maintenance cost, per $-9000 Year Salvage Value $1,000 Life 5 years Y $-55,000 $-4000 $6,500 5 years The present worth of alternative X is $ 13888 and that of alternative Y is $ 44459.4 Alternative X is selected by the company.
2. Choose from the two machines which is more economical? Machine A Machine B P 8,000 P 14,000 15 15 0 2,000 P 3,000 P 1,200 3% First Cost Life Salvage Value Annual Operation P 2,400 Annual Maintenance P 1,000 Taxes and Insurance 3% Which will you choose if minimum required profit is 16%. Use Rate of Return on Additional Investment, Annual Cost Method and Present Worth Method
The Fence Company is setting up a new production line to create top rails. The relevant data for two alternatives are shown below. Flow Line Manufacturing Cell Installed Cost Expected Life Salvage Value Variable Cost per Top Rail Click here to access the TVM Factor Table Calculator $15,000 5 years $0 $6.00 $10,000 5 years $0 $7.00
Total Life Cycle Cost, Break-Even Point, and Payback Period. Show the calculation steps_ Some information about two vehicles A and B, is provided in the table below. A B $24,000 $30,000 $0.15 $0.1375 Vehicle Vehicle Purchase Cost Vehicle Operating Cost Per Mile Useful Life of Vehicle (years) Miles Per Year Miles Per Gallon Average Fuel Price Per Gallon 10 15,000 30 $4.5 10 15,000 40 $4.5 A) Calculate the total life cycle cost for vehicle A and B, respectively. B) Calculate the break-even point in miles between the two vehicles. C) Based on the break-even mileage in the above question, calculate the payback period in years.
1. Prepare a differential anaysis comparing present machine (Alt. 1) to new machine (Alt. 2). Analysis should indicate total differential income over the six-year period if the new machine is purchased. 2. Which Alternative would you propose? What other factors should be considered? 3. What if you could invest the funds required to purchase the new equipment (cost less proceeds from sale of old machine) at 4% per year. Does this change your viewpoint? What does this indicate of the limitations of this method for evaluating an investment proposal?
Use the following alternatives to develop an incremental analysis choice table and answer the following questions. Alternative A Initial Cost - $15,000 Annual Revenue (Year 1-15) - $2500 Salvage Benefit (Year 15) - $2000 Alternative B Initial Cost - $25,000 Annual Revenue (Year 1-15) - $3500 Salvage Benefit (Year 15) - $5000 1. Determine the incremental rate of return IRRHigh-Low. Provide your answer as a percentage and round to the nearest hundredth. 2. Determine the internal rate of return for the higher cost alternative IRRHigh. Provide your answer as a percentage and round to the nearest hundredth. 3. Determine the internal rate of return for the lower cost alternative IRRLow. Provide your answer as a percentage and round to the nearest hundredth. Please answer all 3.

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