The Riteway Ad Agency provides cars for its sales staff. In the past, the company has always purchased its cars from a dealer and then sold the cars after three years of use. The company's present fleet of cars is three years old and will be sold very shortly. To provide a replacement fleet, the company is considering two alternatives:

Purchase alternative: The company can purchase the cars, as in the past, and sell the cars after three years of use. Ten cars will be needed, which can be purchased at a discounted price of $17,000 each. If this alternative is accepted, the following costs will be incurred on the fleet as a whole:


Annual cost of servicing, taxes,

and licensing
$3,000
Repairs, first year
$1,500
Repairs, second year
$4,000
Repairs, third year
$6,000
At the end of three years, the fleet could be sold for one-half of the original purchase price.
Lease alternative: The company can lease the cars under a three-year lease contract. The lease cost would be $55,000 per year (the first payment due at the end of Year 1). As part of this lease cost, the owner would provide all servicing and repairs, license the cars, and pay all the taxes. Riteway would be required to make a $10,000 security deposit at the beginning ot the lease period, which would be refunded when the cars were returned to the owner at the end of the lease contract.
Riteway Ad Agency's required rate of return is 18%.
Required:
(Ignore income taxes.)
1. Use the total-cost approach to determine the present value of the cash flows associated with each alternative. Round all dollar amounts to the nearest whole dollar.
2. Which alternative should the company accept?

Answers

Answer 1

Answer:

A. Net present value$132,554

B. Net present value$123,480

C. Lease Alternative

Explanation:

A. Calculation to determine the present value of the cash flows associated with Purchase Lease Alternative

PURCHASE LEASE ALTERNATIVE:

Now 1 2 3

Purchase of cars$(170,000)

Annual servicing costs$(3,000)$(3,000)$(3,000)

Repairs (1,500) (4,000) (6,000)

Resale value of cars 85,000

Total cash flows (a)$(170,000)$(4,500)$(7,000)$76,000

Discount factor (b) 1.000 0.847 0.718 0.609 Present value (a) × (b)

=$(170,000)$(3,812)$(5,026)$46,284

Net present value$132,554

[170,000)$(3,812)$(5,026)$46,284=$132,554]

Therefore the present value of the cash flows associated with Purchase Lease Alternative is $132,554

B. Calculation to determine the present value of the cash flows associated with Lease Alternative

LEASE ALTERNATIVE:

Now 1 2 3

Security deposit$(10,000)

Annual lease payments $(55,000)$(55,000)$(55,000)

Refund of deposit 10,000

Total cash flows (a)$(10,000)$(55,000)$(55,000)$(45,000)

Discount factor (b) 1.000 0.847 0.718 0.609 Present value (a) × (b)

=$(10,000)$(46,585)$(39,490)$(27,405)

Net present value $123,480

[$(10,000)$(46,585)$(39,490)$(27,405)=$123,480]

Therefore the present value of the cash flows associated with Lease Alternative is $123,480

C. Based on the above Calculation for (a) and (b) the alternative that the company should accept is LEASE ALTERNATIVE reason been that the alternative Net present value of the total costs is the lowest.

Answer 2

Using the total cost approach, the present value of the purchase alternative is  $123,499 and the present value of the lease alternative is  $123,499.

The lease alternative would be accepted.

Present value is the sum of discounted cash flows. It is the value of a stream of cash flows today. Present value would be determined using a financial calculator.

Cash flow of the purchase alternatives

Cash flow in year 0 = $17,000 x 10 = $170,000

Cash flow in year 1 = $-3000 - $1500 = $-4500

Cash flow in year 2 =  $3000 + $4000 = $7000

Cash flow in year 3 =  $3000 + $6000 - ($170,000 / 2) = $-76,000

Discount rate = 18%

Present value = $132,585

Cash flow of lease alternative

Cash flow in year 0 = $10,000

Cash flow in year 1 = $55,000

Cash flow in year 2 = $55,000

Cash flow in year 3 = $55,000-  $10,000 = $45,000

Discount rate = 18%

Present value = $123,499

The lease alternative is cheaper and would be preferred.

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Related Questions

____ an business that is able to raise capital by selling shares on the stock market​

Answers

Answer:

public limited company

Explanation:

shares of public limited companies can be freely brought and sold on the sock market .

Flower farming is earning popularity day by day in Nepal justify this statement

Answers

Importance of flower cultivation is increasing day by day in Nepal because they understood the income which can be generated by floriculture and the soil also permits the cultivation of the plants at a large scale.

Who, if anyone, is exploited in the use of sex to sell
commodities?​

Answers

Answer:

Women are exploited in the use of sex to sell  commodities

Explanation:

Women are exploited when sex is used as a tool to sell something. Such heinous thought processes lead to crime such as forced prostitution. The commercial sexual industry has always projected women as a substance of pleasure or use and hence provoke men to purchase sex for money.

When you buy something and make no payments for several months is called

Answers

Answer:

Deferred (interest)

Explanation:

I have to have a certain amount of characters so don't mind this part down here

Select the correct answer.
What is the minimum educational requirement for a pediatric psychopharmacologist?
A. MD
B. PhD
C. bachelor’s in medicine
D. master’s in medicine
E. PsyD

THE ANSWER IS A(md)

Answers

In my opinion I think the answer is C just to me

Which of the following is NOT a travel, hospitality, and tourism career?

A. Chef

B. Pilot

C. Curator

D. Truck Driver

Answers

chef is not a travel,hospitality, and tourism career

Answer:

Truck driver. that is the only one that doesn’t effect personal travel, vacations, etc

Explanation:

101
d Discuss whether or not gold rings can carry out the functions of money. (8)​

Answers

Answer:

Money is called any element that works in a given territory as a method of exchange of wealth and as a reserve of value, that is, it can be exchanged between individuals for other goods, and that in turn can be accumulated by each individual to add to your personal wealth. In this context, almost any item that has been commonly accepted as having these characteristics can be considered money. However, there are circumstances in which, either due to their lack of storage practicality, or their high value in itself, certain elements escape this possibility. This is the case of a gold ring, whose excessively high value and the impossibility of its fractionation take away the possibility of being used as a method of exchange.

List 3 responsibilities that a consumer has when making a purchase.

Answers

Answer:

check receipt, know the return policy, read the fine print

Explanation:

Welcome

The Federal Open Market Committee (FOMC) is made up of Multiple Choice the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis. the seven members of the Board of Governors along with the president of the New York Federal Reserve Bank. the seven members of the Board of Governors of the Federal Reserve System along with the three members of the Council of Economic Advisers. the chair of the Board of Governors along with the 12 presidents of the Federal Reserve Banks.

Answers

Answer:

the seven members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a rotating basis.

Explanation:

The Federal Reserve System ( popularly referred to as the 'Fed') was created by the Federal Reserve Act, passed by the U.S Congress on the 23rd of December, 1913. The Fed began operations in 1914 and just like all central banks, the Federal Reserve is a United States government agency.

Generally, it comprises of twelve (12) Federal Reserve Bank regionally across the United States of America.

Like all central banks, the Federal Reserve is a government agency that is saddled with the following responsibilities;

I. The Fed controls the issuance of currency in United States of America: it promotes public goals such as economic growth, low inflation, and the smooth operation of financial markets.

II. It provides banking services to all the commercial banks in the country because the Federal Reserve is the "lender of last resort."

III. It regulates banking activities in the United States of America: it has the power to supervise and regulate banks.

The Federal Open Market Committee (FOMC) is comprised of the seven (7) members of the Board of Governors of the Federal Reserve System along with the president of the New York Federal Reserve Bank and four other Federal Reserve Bank presidents on a one-year term rotating basis. The FOMC are typically responsible for making monetary policy and the determination of the direction of the monetary policy in the United States of America.

what is a trademark?

Answers

Answer:

A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks

Explanation:

Anandi has been working with Excel to record data from an extensive physics experiment at her university. She
hundreds of columns representing different trials, and many rows showing different pieces of data from each trial
handful of cells have data that stand out, so she needs to show them to her professor, even though these cells ar
hundreds of columns apart.
If Anandi has written down the names of those cells, what is the fastest way to get to these cells while in Excel?
O dragging the scroll box and trying to find the needed cells
O pressing the arrow keys until each appropriate cell is active
O holding the shift key while typing in the addresses of all cells
pressing Control + G and typing in the address of each needed cell

Answers

Answer: pressing Control + G and typing in the address of each needed cell

Explanation:

Assuming Anandi has written down the names of the cells, the fastest way to get to these cells while in Excel will be for him to press Control + G and type in the address of each needed cell.

It should be noted that Control + G refers to a keyboard shortcut that is used when one wants to move to a particular line in a spreadsheet or document or advance through the Find results.

By pressing Control + G and typing in the address of each needed cell, thus will take Anandi to the required cell faster.

Jamie purchased a 50% general partnership interest in Partnership M for $40,000 in Year 1. To finance operations, Partnership M entered into a recourse debt agreement for $100,000 of which each partner is personally liable for half. Partnership M also entered into a nonrecourse debt agreement for $22,000, which is secured by partnership equipment. Jamie’s at-risk limitation on losses is:

Answers

Answer:

$90,000

Explanation:

Calculation to determine what Jamie’s at-risk limitation on losses is:

Using this formula

Risk limitation on losses=[Partnership M +(General partnership interest× Recourse debt agreement)]

Let plug in the formula

Risk limitation on losses= [$40,000 + (50% × $100,000)]

Risk limitation on losses=($40,000+$50,000)

Risk limitation on losses=$90,000

Therefore Jamie’s at-risk limitation on losses is:$90,000 and the reason why Jamie’s at-risk limitation on losses was the amount of $90,000 was because of his share of the recourse debt of the amount of $100,000 as well as the cash amount of $40,000 he invested.

I need Welp Help help Help help​

Answers

I am 2 weeks late do you still need help with this assignment?

Answer:

Hello do you still need help with this?

Explanation:

Which type of investment works by taking investors’ money, investing that collective money in stocks, bonds, and other investments, and managing this portfolio for the investors? A. government bonds B. common stocks C. mutual funds D. savings accounts

Answers

Answer:

Option C

Mutual fund is the type of investment that works by taking investors’ money, investing that collective money in stocks, bonds, and other investments, and managing this portfolio for the investors

Explanation:

Mutual fund is basically a form of investment in which different investors pour in their money in various forms of securities such as stocks and bonds. These securities are taken care of by the Relationship/Money manager. This form of investment reduce the risk as investing individual's money into securities in not safe subjected to variation in market

Hence, option C is the correct answer

Answer:

Mutual funds

I got it right on my test, d;

PLEASE HELP!! I WILL GIVE YOU 100 POINTS
Review Questions
Please give an example of a career that fits into each of the following four pathways and briefly describe what a person in this career would do:
Law, public safety, corrections, and safety
Government and public administration
Human services
Education and training
What does it mean to be a diplomat? Please give two examples of responsibilities a diplomat would have in their job with your answer.
In the health-care field, there are face-to-face types of jobs and behind-the-scenes jobs. What is the difference between the two? Please give an example of each with your answer.
Careers in the Public Service cluster can help make a difference in the world but they can be tough careers to work in. Describe what a person who would love working in this field may be like.
What would be some of the responsibilities of a documentary film editor? Please list at least two responsibilities and also give an example of a personality type a person could have that would make them a good documentary film editor.
Critical Thinking Questions
What are some personality characteristics that may be important for someone to have when choosing a career in Health Services? Why?
What are some of the challenges that you think come with being in the entertainment industry? Explain.
A large part of the Communication and Information career cluster probably didn’t exist 100 years ago—which part in particular and why? Why might this aspect of the career cluster be one of the most important today?
The unit discusses the word ‘holistic’ in relation to childbirth. Can you think of any other areas of health and wellness that might have holistic approaches? Why might someone want to try a holistic approach?
People who work in insurance claims or in a research lab work behind the scenes of healthcare and make so much possible for patients without getting much credit. Can you think of another career cluster or industry that also has people working behind the scenes without getting much credit? Why would someone choose to work behind the scenes?

Answers

Answer:

Explanation:

Examples of jobs in

Law, public safety, corrections, and safety  - lawyer, police and jail officer

Government and public administration  - county clerk and city manager

Human services  - HR manager

Education and training  - teacher and trainer

What does it mean to be a diplomat? Please give two examples of responsibilities a diplomat would have in their job.

A diplomat represents a country in dealing with foreign countries. Examples of responsibilities include issue VISA to foreign tourists and review asylum request.

In the health-care field, there are face-to-face types of jobs and behind-the-scenes jobs. What is the difference between the two? Please give an example of each.

Health-care face-to-face jobs deal directly with sick people such as doctors and nurses. Behind-the-scenes health-care jobs include medical researchers.

Answer:

Explanation:

Careers in the Public Service cluster can help make a difference in the world but they can be tough careers to work in. Describe what a person who would love working in this field may be like.

Public Service does not pay as well as private sectors but person who love working enjoy the public service aspect of it. They like to provide service to the public and help people.

What would be some of the responsibilities of a documentary film editor? Please list at least two responsibilities and also give an example of a personality type a person could have that would make them a good documentary film editor.

Documentary film editor needs to find an interesting topic for filming and present the topic in a film. Person doing this must be sensitive to what is interesting and creative to make a film.

Emily just got a car. She needed insurance, so she has purchased the insurance and pays the premium. Who is Emily in this scenario? A. the person with power of attorney B. the insurer C. the policyholder D. the rider

Answers

Answer:

Policy holder

Explanation:

There is no power of attorney needed nor mentioned in the problem. The insurer is the one who sells the policy. The rider doesn’t have to have insurance so that is irrelevant.

Answer:

Policy Holder

Which situations offer examples of Business Financial Management workers? Check all that apply.

- Lupe analyzes investment information for companies.
- Kirk helps individuals complete bank transactions.
- Keisha uses mathematical models to make tools for analyzing finances.
- Stuart researches company records to investigate fraud.
- Margaret analyzes statistics to determine whether to offer insurance to people.
- Chung helps a family create an investment plan.

It is a mulitple choice question. you have to pick more than one.

Answers

Answer:

• Lupe analyzes investment information for companies.

• Keisha uses mathematical models to make tools for analyzing finances.

• Stuart researches company records to investigate fraud.

Explanation:

The financial management industry usually involves analysis of financial information to provide for the best investment advice.

The government is also a participant in the industry and their aim in using Financial management is to ensure that people are abiding by the law.

Lupe analazying company information is definitely part of the industry and so is Keisha. Stuart seems to be a government employee or affiliate that is in the financial management industry to ensure that the law is being adhered to.

Answer:its ACD

Explanation:

What account is more likely to have penalties for frequent withdrawls?

A pending account

B savings account

C available account

D checking account

Answers

Answer:

saving account is a very important

hey bestie ily but u kinda smell like tuna u should wash ur Cooter she loves u too-a if u want me u eat her stop smelling like tuna Luna. You also need to stop wearing puma before i call Uma and he's at Zumba he'll probably be upset. :) K? And for the last time stop coming into my room-a before i call uma whom-a will boom ya and put u in a tomb-a.

Answers

Answer:

inspirational paragraph definitely send it

Explanation:

dont.  .

.

//  /.

.

. .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

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. .

things we need to normalize:

Answers

Women having body hair

Answer:

Being part of the LGBTQ community

Reality Entertainment, Inc is a major producer of reality TV programming. The company faces tough competition from three other major producers of similar shows. Together, Reality Entertainment and its three rivals control almost the entire reality TV programming. Explain about the degree of competition that exists according to this example.

Answers

Answer: An Oligopoly

Explanation:

An Oligopoly is a market situation where there are few sellers of a product or service and each seller supplies a large percentage of all the products sold in the marketplace.

From the example in the question, we have just four companies in the Reality TV Programming

paid Rs 1,00,000 to so Mrs Shakya as an advance to purchase office furniture.


It's journal voucher.....​

Answers

Answer:

Dr. BE Mrs shakya, advance for furniture and fixtures

Cr. NRB

O Which of the following is true of grapevine communication? a. It is primarily used by supervisors. O b. It only occurs at times of crisis. . OC. It can happen online O d. It can be easily controlled by managers.​

Answers

Answer:

Option C

Explanation:

Grapevine communication is an informal mode of communication in corporates offices premises. It can occur at any level  and across all directions irrespective of the designation of an individual.

The common example of this form of communication is gossip or rumor

Gossip and rumor can happen online hence, option C is correct

When an investor borrows money to buy stock it is called

Answers

Using a loan to pay for stock is called buying on margin
when an investor borrows money or buy stock is called buying on margin

what does the abbreviation of CD stand for. (this is financial i put it under business because it is the closest thing to financial literacy)
A. certificate of disposal
B.certificate of interest
C.credit of deferral
D.certificate of deposit

Answers

Answer:

D) certificate of deposit.

Explanation:

Vincent operates a scenic tour business in Boston. He has one bus which can fit 50 people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed at $450. Vincent’s cost is not reduced if he runs a tour with a partially full bus. While his cost is the same for all tours, Vincent uses a pricing practice called price discrimination and charges each passenger his/her willingness to pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those rates, on a typical day Vincent’s demand is:

Passenger Type

Willingness to Pay

Demand per day

Adults

$18

70

Children

$10

25

Senior Citizens

$12

55

Assume that Vincent’s customers are always available for the tour; therefore, he can fill his bus for each tour as long as there is sufficient total demand for the day.
What is Vincent’s cost of serving all passengers demanding a tour on a typical day?
What is Vincent’s profit on a typical day?
One of Vincent’s friends tells him he would be more profitable if he charged a single price of $18. Assuming no changes in consumer demand, what would Vincent’s profit be if he charged every customer $18? (3 points)

Answers

Answer:

lmk when you get sumtn bro

Explanation:

i need the answer too

Vincent’s cost of serving all passengers demanding a tour on a typical day is  $1350. Vincent’s profit on a typical day is $820.  Vincent’s profit will be increased he charged every customer $18.

What  is price discrimination?

A selling tactic known as price discrimination involves charging clients various rates for the same good or service depending on what the vendor believes they can persuade the customer to accept.

When a merchant uses pure price discrimination, they charge each consumer the highest price they will agree to.

The calculation of the profit of the Vincent is done as follows

1.Number of the tour operated by the Vincent on a typical day=

= Adult demand + children demand + senior citizens demand/ Bus capacity

= 70+25+55/50

= 150/50

= 3

Total cost of the tour = $450*3

                                 = $1350

2. Total Revenue on a typical day = Adult demand * willingness to pay+ Children demand* willingness to pay + senior demand * willingness to pay

= 70* $18 + 25* $10+ 55 * $12

= $2170

Profit = total revenue - total cost

       = $2170 - $ 1350

       = $820

If he charged every customer $18 with every customer then his profit will be calculated as follows:-

Total Revenue on particular day = Adult demand * $18 + Children's demand * $18 + senior's demand * $18

= 70 *18+25*18+55*18

= $1260+$450+$990

= $ 2700

Profit = Total Revenue - Total cost

         = $ 2700 - $ 1350

          = $ 1350

Therefore, the profit charged on the price $18 is $1350 which is greater than the previous profit.

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write two differences between simple clock and atomic clock​

Answers

Answer:

Simple clocks measure time by counting, quartz crystal vibrations or mechanical pendulum oscillations. Atomic clocks measure the oscillations in electron transitions by the radiation emitted in the form of microwave or higher frequency electro magnetic waves.

hope it helps.

Bristol Company's contribution margin income statement is presented below. Sales for the current period consisted of 7,500 units. Compute the company's break-even point in (a) units, and (b) dollars Compute the margin of safety in (c) dollars and (d) percent. Bristol Company Contribution Margin Income Statement $225,000 Sales Variable costs Contribution margin Fixed costs Net income 90,000

Answers

Answer and Explanation:

The computation is shown below:

The Selling price per unit = $225,000 ÷ 7500 = $30

ANd,  

Variable cost per unit = $135,000 ÷ 7500 = $18

a) Breakeven point = Fixed cost ÷ Contribution margin per unit

= $48,000 ÷ ($30 - $18)

= 4000 units

b) Breakeven dollars = Breakeven point × selling price per unit

= 4000 × 30

= $120,000

C) Margin of Safety in dollars = Sales Revenue - Breakeven dollars

= $225,000 - $120,000

= $105,000

d) Margin of Safety in percent

= $105,000 ÷ $225,000

= 46.67%

What are the six basic step of the problem solving process?

Answers

Answer:

1. Identify The Problem

2. Analyze The Problem

3. Develop The Solutions

4. Implement A Solution

5. Evaluate The Results

6. Standardize The Solution

Explanation:

The six basic steps in problem solving involves Identification, generating possible solutions, evaluating alternatives, deciding on a solution, implementing the solution and evaluating the outcome.

What is Problem Solving?

Problem solving involves the process of providing a viable solution to a problem.

The process of providing this solution follows a series of steps which ensure that the best possible solution to the problem is implemented.

This also gives a step by step analysis of how future problems which may relate to the present situation can be solved.

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Lauren is the owner of a bakery. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. If she could earn $53,000 working for another bakery nearby, we know that her economic profit was A) $53,000. B) $65,000 ? C)$0. D) $145,000.

Answers

Answer:

So if you subtract the cost of everything for her bakery she still comes out with making 53,000, so if she left she would not earn any profit because she would be making the same.

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