A forklift will last for only 3 more years. It costs $6,000 a year to maintain. For $17,000 you can buy a new lift that can last for 8years and should require maintenance costs of only $3,000 a year.a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 5% per year.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.a-2. Should you replace the forklift?b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 12% per year.Note: Do not round intermediate calculations. Round your answer to 2 decimal places.b-2. Should you replace the forklift?a-1. Equivalent costa-2. Should you replace the forklift?b-1. Equivalent costb-2. Should you replace the forklift?

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Answered: A forklift will last for only 3 more…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A forklift will last for only 4 more years. It costs $6,500 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $3,500 a year. a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 4% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a-2. Should you replace the forklift? b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 14% per year. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b-2. Should you replace the forklift? a-1. Equivalent cost a-2. Should you replace the forklift? b-1. Equivalent cost b-2. Should you replace the forklift? $ Yes $ No 23,594.51 18,256.40
Your landscaping company can lease a truck for $8,400 a year (paid at year-end) for 7 years. It can instead buy the truck for $44,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. Is it cheaper to buy or lease? c. What is the present value of the cost of leasing if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Is it now cheaper to buy or lease? Your landscaping company can lease a truck for $8,400 a year (paid at year-end) for 7 years. It can instead buy the truck for $44,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%. a. What is the present value of the cost of leasing? (Do not round intermediate calculations. Round…
Compute the monthly payment and the total amount spent for a vehicle that costs $24,000 if you finance the entire purchase over 5 years at an annual rate of 8 25 percent. Calculate the payment if you finance the car for only four years. Finally, calculate the payment for three years. What do you notice about the payment under the different time assumptions? Note: Round intermediate computations to at least five (5) decimal places Click on the table icon to view the MILPF table The monthly payment, PMT, on the 5-year auto loan is $ (Round to the nearest cent.) The total amount spent if you financed $24,000 for 5 years at 8 25 percent per year is $ (Round to the nearest cent.) The monthly payment, PMT, on the 4-year auto loan is $ (Round to the nearest cent.) Finally, the monthly payment, PMT, on the 3-year auto loan is $ (Round to the nearest cent.) What do you notice about the payment under the different time assumptions? (Select the best choice below.) OA. As the number of payments…
Suppose that a car that you want costs $9000. You make a down payment of $1000 and finance the rest for 4 years at 1.9% interest, compounded monthly. If you make monthly payments for 4 years, what is the total amount of interest that you'll end up paying? Round your answer to two decimal places if rounding is necessary. The $ sign is already written next to the answer box, so do not type a $ sign in your answer.
How to compute Equivalent Annual Annuity on financial calculator: The old combine is good for 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new combine that can last for 10 years and should require maintenance costs of only $2,000 a year. Old machine has no scrap value when fully depreciated (after 2 years). a. If the discount rate is 4% per year, should you replace it? b. What if the discount rate is 14% per year? Does your answer change and why?
A local company is willing to sell you a small diesel generator for $6,418. They're willing to give it to you today, and you can pay for it in 5 years. If your discount rate is 4.43% nominal yearly, compounded weekly, how much does this generator cost for you to purchase when discounted? Enter the answer below in $'s without the dollar sign, accurate to two decimal places. i.e. $2567.12 would be entered as 2567.12
3. Calculate the internal rate of return for a machine that costs $550,000 and provides annual revenue of $125,000 per year for 5 years. You can assume all revenue is received once a year at the end of the year. a. Compare the IRR to the interest rate on a loan to fund the machine cost at 5.3%. Based on this information should you take on a loan to purchase this machine. Justify your answer.
Explanation it correctly and not use of excel.proper use formula to solve. Q)A condominium unit can be bought at a down payment of P150,000and a monthly payment of P10,000 for 10 years starting at the end of 5th year from the date of purchase. If money is worth 12% compounded monthly, what is the cash price of the condominium unit?
Your landscaping company can lease a truck for $8,150.00 a year for 4 years. It can instead buy the truck for $23,388.56. The truck will be valueless after 4 years. a. What is the present value of the lease payments, If the interest rate your company can earn on its funds is 11.00%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b. Is it cheaper to buy or lease? buy lease
a. The cost of a new automobile is $10,900. If the interest rate is 4%, how much would you have to set aside now to provide this sum in four years? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. You have to pay $11,000 a year in school fees at the end of each of the next five years. If the interest rate is 7%, how much do you need to set aside today to cover these bills? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. You have invested $55,000 at 7%. After paying the above school fees, how much would remain at the end of the five years? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. X Answer is not complete. $ 9,317.37 a. Present value b. Present value c. Future value $ 13,882.12
A firm can lease a truck for 4 years at a cost of $38,000 annually. The lease includes maintenance. The firm can instead buy a truck at a cost of $88,000, with annual maintenance expenses of $18,000. The truck has no salvage value at the end of 4 years. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10% Round your answer to the nearest dollar and report it without the $ symboli
You need a loan of $110,000 to buy a home. Calculate your monthly payments and total closing costs for each choice below. = Choice 1: 15-year fixed rate at 4% with closing costs of$1600 and no points. Choice 2: 15-year fixed rate at 3.5% with closing costs of$1600 and 3 points. What is the monthly payment for choice 1? $_______ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the monthly payment for choice 2? $_____ (Do not round until the final answer. Then round to the nearest cent as needed.) What is the total closing cost for choice 1? $_____ What is the total closing cost for choice 2? $_____ Why might choice 1 be the better choice? A.The monthly payment is lower. B. The closing costs are lower. C. The monthly payment is higher. D. The closing costs are higher. Why might choice 2 be the better choice? A. The closing costs are lower. B. The monthly payment is lower C. The monthly payment is higher. D. The closing…

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