Five years ago, a company was considering the purchase of 68 new diesel trucks that were 14.63% more fuel-efficient than the ones the firm is now using. The company uses an average of 10 million gallons of diesel fuel per year at a price of $1.25 per gallon. If the company manages to save on fuel costs, it will save $1.875 million per year (1.5 million gallons at $1.25 per gallon). On this basis, fuel efficiency would save more money as the price of diesel fuel rises (at $1.35 per gallon, the firm would save $2.025 million in total if he buys the new trucks).
Consider two possible forecasts, each of which has an equal chance of being realized. Under assumption #1, diesel prices will stay relatively low; under assumption #2, diesel prices will rise considerably. The 68 new trucks will cost the firm $5 million. Depreciation will be 25.49% in year 1, 38.5% in year 2, and 36.35% in year 3. The firm is in a 39% income tax bracket and uses a 9% cost of capital for cash flow valuation purposes. Interest on debt is ignored. In addition, consider the following forecasts:
Forecast for assumption #1 (low fuel prices):
|
Price of Diesel Fuel per Gallon |
|||
|
Prob. (same for each year) |
Year 1 |
Year 2 |
Year 3 |
|
0.1 |
$0.8 |
$0.91 |
$1.01 |
|
0.2 |
$1.02 |
$1.12 |
$1.09 |
|
0.3 |
$1.12 |
$1.22 |
$1.32 |
|
0.2 |
$1.31 |
$1.45 |
$1.47 |
|
0.2 |
$1.4 |
$1.55 |
$1.61 |
|
Forecast for assumption #2 (high fuel prices): |
|||
|
Price of Diesel Fuel per Gallon |
|||
|
Prob. (same for each year) |
Year 1 |
Year 2 |
Year 3 |
|
0.1 |
$1.23 |
$1.53 |
$1.72 |
|
0.3 |
$1.31 |
$1.7 |
$1.99 |
|
0.4 |
$1.83 |
$2.32 |
$2.5 |
|
0.2 |
$2.22 |
$2.52 |
$2.81 |
Required: Calculate the percentage change on the basis that an increase would take place from the NPV under assumption #1 to the probability-weighted (expected) NPV.
In: Finance
The left-field wall at a baseball park is 320 feet down the third-base line from home plate; the wall itself is 38 feet high. A batted ball must clear the wall to be a home run. Suppose a ball leaves the bat, 3 feet off the ground, at an angle of 45degrees. Use gequals32 ft/sec squared as the acceleration due to gravity and ignore any air resistance. Complete parts (a) through (d). (a) Find parametric equations that model the position of the ball as a function of time. (b) What is the maximum height of the ball if it leaves the bat with a speed of 120 miles per hour? Give your answer in feet. (c) What is the ball's horizontal distance from home plate at its maximum height? Give your answer in feet. (d) If the ball is hit straight down the third-base line, will it clear the wall? If it does, by how many feet does it clear the wall?
In: Physics
In this problem, assume that the distribution of differences is
approximately normal. Note: For degrees of freedom
d.f. not in the Student's t table, use
the closest d.f. that is smaller. In
some situations, this choice of d.f. may increase
the P-value by a small amount and therefore produce a
slightly more "conservative" answer.
Suppose that at five weather stations on Trail Ridge Road in Rocky
Mountain National Park, the peak wind gusts (in miles per hour) for
January and April are recorded below.
| Wilderness District | 1 | 2 | 3 | 4 | 5 |
| January | 127 | 138 | 139 | 64 | 78 |
| April | 107 | 105 | 115 | 88 | 61 |
Does this information indicate that the peak wind gusts are higher in January than in April? Use α = 0.01. Solve the problem using the critical region method of testing. (Let d = January − April. Round your answers to three decimal places.)
| test statistic | = | |
| critical value | = |
In: Math
In this problem, assume that the distribution of differences is approximately normal. Note: For degrees of freedom d.f. not in the Student's t table, use the closest d.f. that is smaller. In some situations, this choice of d.f. may increase the P-value by a small amount and therefore produce a slightly more "conservative" answer. Suppose that at five weather stations on Trail Ridge Road in Rocky Mountain National Park, the peak wind gusts (in miles per hour) for January and April are recorded below. Wilderness District 1 2 3 4 5 January 133 122 134 64 78 April 110 97 107 88 61 Does this information indicate that the peak wind gusts are higher in January than in April? Use α = 0.01. Solve the problem using the critical region method of testing. (Let d = January − April. Round your answers to three decimal places.) test statistic = critical value =
In: Math
An object with a mass of 49.8 pounds is moving with a uniform velocity of 30.9 miles per hour. Calculate the kinetic energy of this object in joules
In: Chemistry
The accompanying data represent the miles per gallon of a random sample of cars with a three-cylinder, 1.0 liter engine.
|
(a) |
Compute the z-score corresponding to the individual who
obtained
41.4 miles per gallon. Interpret this result. |
|
(b) |
Determine the quartiles. |
|
(c) |
Compute and interpret the interquartile range, IQR. |
|
(d) |
Determine the lower and upper fences. Are there any outliers? |
32.7
34.0
34.7
35.4
36.0
36.2
37.3
37.6
37.7
37.9
38.1
38.5
38.6
39.0
39.2
39.4
39.9
40.7
41.4
41.8
42.5
42.8
43.7
49.0
In: Statistics and Probability
Which of the following problems cannot be solved using a proportional relationship?
(i) A 30-mile drive is about 48.3 kilometers. Approximately how many kilometers is a 60-mile drive?
(ii) A gallon of gas costs $3.49 on October 8, 2011 at the Chevron station on the corner of Imola and Soscol. What does 10 gallons of gas cost on that same day at the same station?
(iii) A car travels 50 miles in 2 hours in heavy traffic. How long does it take the car to travel 25 miles in light traffic?
In: Statistics and Probability
On January 1, Year 1, the City Taxi Company purchased a new taxi cab for $90,000. The cab has an expected salvage value of $38,000. The company estimates that the cab will be driven 200,000 miles over its life. It uses the units-of-production method to determine depreciation expense. The cab was driven 45,000 miles the first year and 102,000 the second year. What would be the depreciation expense reported on the Year 2 income statement and the book value of the taxi, respectively, at the end of Year 2?
|
$26,520 and $13,780. |
||
|
$26,520 and $51,780. |
||
|
$45,900 and -$14,150. |
||
|
$45,900 and $23,850 |
In: Accounting
A 3.24 g object is immersed into a graduated cylinder filled with water. Use the following figure to determine the object’s density. Enter just the numerical value without units. (V1=65ml, V2=90ml)
How many grams of water are contained in a 0.127 L sample at 20°C?
How much will you spend in fuel to travel 405 miles? Your car gets on average 37 miles per gallon and gas costs $2.70/gallon. Report your answer to four significant figures. Enter just the numerical value without the dollar sign.
In: Chemistry
On January 1, 2018, the Excel Delivery Company purchased a
delivery van for $52,000. At the end of its five-year service life,
it is estimated that the van will be worth $4,000. During the
five-year period, the company expects to drive the van 150,000
miles.
Required:
Calculate annual depreciation for the five-year life of the van
using each of the following methods.
1. Straight line.
2. Sum-of-the-years’-digits.
3. Double-declining balance.
4. Units of production using miles driven as a
measure of output, and the following actual mileage
In: Accounting