Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain, but lasts two years longer than the other. Gateway's discount rate is 9%. It plans to continue with one of the twomodels for the foreseeable future. Based on the equivalent annual costs of each, shown below, which should it choose?[Note: I have tried to make it easier for you to solve this problem. You do not need to do extra, unnecessary calculations merely to show me your work.]ModelOld RYear 0$0Year 1-$29Year 2-$29Year 3Year 4-$29Year 5-$29-$29Year 6-$29S & S$0-$27-$27-$27-$27Which bus should Gateway Tours choose, and why?because $is better than $Give me the name of the bus that should be chosen, and the final numbers that justify your answer. Your answer must take the form: "ChooseBIUS Ix = =X₂x²Insert Formula14!!!!!!HIM

As per the given information: Discount rate - 9% To determine: Determination as to which model…

Answered: -$29 -$27 -$29 -$27 Tours choose, and…

Business

Finance

-$29 -$27 -$29 -$27 Tours choose, and why? is that should he chosen -$29 -$27 -$ hosen and the final r

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PB: Karens Quilts is considering the purchase of a new Long-arm Quilt Machine that will cost $17,500 and...

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The Atlantic Medical Clinic can purchase a new computer system that will save $7,000 annually in billing costs. The computer system will last for nine years and have no salvage value. Click here to view Exhibit 14B-1 and Exhibit 14B-2 to determine the appropriate discount factor(s) using tables. Required: What is the maximum price (l.e., the price that exactly equals the present value of the annual savings in billing costs) Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: Note: Round your final answer to the nearest whole dollar amount. Maximum Price 1. Seven percent 2. Eleven percent
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A company is trying to decide whether to buy a new delivery truck to replace their old one. The old truck originally cost $32,000. The new truck will cost $45,000. If they buy the new truck, they will sell the old truck to a used truck dealer for $4,000. Based on the information given, what is the immediate total incremental cost or benefit of buying the new truck? (Indicate a net benefit as a positive number and a net cost as a negative number.)
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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 $4,100 apiece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $29,850 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life. Expected yearly before-tax cash savings due to acquiring the new vans amounts to $4,800. If your cost of capital is 8 percent and your firm faces a 34 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)
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You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $23,000 to purchase and which will have OCF of −$550 annually throughout that vehicle's expected five-year life. Both cars will be worthless at the end of their life. If you intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 12 percent, what is the difference in the EAC of the two cars?
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will have OCF of -$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle: and the Toyota Prius, which will cost $23,000 to purchase and which will have OCF OF -$550 annually throughout that vehicle's expected five-year life. Both cars will be worthless at the end of their life. If you intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future, and if your business has a cost of capital of 16 percent, what is the difference in the EAC of the two cars? Multiple Choice ___ $428.04 ___ $381.36 ___ $601.51 ___ $586.07
You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $14,000 to purchase and which will have OCF of −$1,200 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $20,000 to purchase and which will have OCF of −$650 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their life. You intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into the foreseeable future. If the business has a cost of capital of 12 percent, calculate the EAC. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)