You are trying to pick the least-expensive car for your new delivery service. You have two...

You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $20,000 to purchase and which will have OCF of –$2,400 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $28,500 to purchase and which will have OCF of –$1,250 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.) Scion's EAC $ Toyota's EAC $ Which one should you choose? Toyota Scion

Solutions

Expert Solution

Use the following inputs on the spreadsheet to calculate the EAC of the 2 cars:

The results obtained are as follows:

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

You are trying to pick the least-expensive car for your new delivery service. You have two...

You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $16,500 to purchase and which will have OCF of −$1,700 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $24,000 to purchase and which will have OCF of −$900 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their...

ou are trying to pick the least-expensive car for your new delivery service. You have two...

ou are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $20,500 to purchase and which will have OCF of –$2,500 annually throughout the vehicle’s expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $29,000 to purchase and which will have OCF of –$1,300 annually throughout that vehicle’s expected 4-year life. Both cars will be worthless at the end of their...

You are trying to pick the least expensive car for your new delivery service. You have...

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...

You are trying to decide whether to keep your current car or buy a new car....

You are trying to decide whether to keep your current car or buy a new car. If you keep your current car you will pay $350 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments for 10 years. Alternatively, you can buy a new car and pay $28,000 today and $300 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments...

You are trying to decide whether to keep your current car or buy a new car....

P2. Car Shopping You have just gone car shopping for a new SUV. You are trying...

P2. Car Shopping You have just gone car shopping for a new SUV. You are trying to play one dealer off another. You have the following two deals to consider. Dealer 1 is offering you the car at a $6,000 discount off of the list price of $30,000. He is offering you a car loan with no money down and making annual payments over five years at 12 percent interest. You went to the bank and found that 12 percent...

Identify the best practices that will form the basis of service delivery. Provide at least two...

Identify the best practices that will form the basis of service delivery. Provide at least two examples of evidence-based practice that can be referred to for the program. Analyze and explain which of the summative evaluation methods is the most effective in accessing a research program's outcomes or effects. Describe the pros and cons of using each method.

Suppose you want to buy a new car and trying to choose between two models: Model...

Suppose you want to buy a new car and trying to choose between two models: Model A: costs $17,000 and its gas mileage is 20 miles per gallon and its insurance is $200 per year. Model B: costs $25,000 and its gas mileage is 35 miles per gallon and its insurance is $400 per year. If you drive approximately 40,000 miles per year and the gas costs $3 per gallon: Find a formula for the total cost of owning Model...

Pick a specific service that you or your workplace purchases. Use the Service-Quality model presented in...

Pick a specific service that you or your workplace purchases. Use the Service-Quality model presented in our textbook and describe the service including the five potential gaps that can cause unsuccessful service delivery.

You are designing a new food delivery service that will use drones to get the product...

You are designing a new food delivery service that will use drones to get the product to customers faster. Think about who your target market would be? If drones are delivering the product you may have some limitations as to who you can deliver to so make sure you don't say that everyone is your target market. Pick a specific demographic group, using 3 demographics to identify them, and talk about how you would market to them. Will you reach...

Subjects