Business, 09.09.2019 21:20 smartie80

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 $18,000 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 $ 5,100
repairs, first year $ 3,000
repairs, second year $ 5,500
repairs, third year $ 7,500
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 $70,000 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 $15,000 security deposit at the beginning of 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 20%.
click here to view exhibit 8b-1 and exhibit 8b-2, to determine the appropriate discount factor(s) using tables.
required:
1. use the total-cost approach to determine the present value of the cash flows associated with each alternative. (any cash outflows should be indicated by a minus sign. round discount factor(s) to 3 decimal places.)
now 1 2 3
purchase alternative:
purchase of cars
annual servicing costs
repairs
resale value of cars
total cash flows
discount factor
present value
net present value
lease alternative:
security deposit
annual lease payments
refund of deposit
total cash flows
discount factor
present value
net present value
2. which alternative should the company accept?
purchase alternative
lease alternative

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 02:30

Consider how health insurance affects the quantity of health care services performed. suppose that the typical medical procedure has a cost of $160, yet a person with health insurance pays only $40 out of pocket. her insurance company pays the remaining $120. (the insurance company recoups the $120 through premiums, but the premium a person pays does not depend on how many procedures that person chooses to undergo.) consider the following demand curve in the market for medical care. use the black point (plus symbol) to indicate the quantity of procedures demanded if each procedure has a price of $160. then use the grey point (star symbol) to indicate the quantity of procedures demanded if each procedure has a price of $40. q d at p=$160 q d at p=$40 0 10 20 30 40 50 60 70 80 90 100 200 180 160 140 120 100 80 60 40 20 0 price of medical procedures quantity of medical procedures demand if the cost of each procedure to society is truly $160, the quantity that maximizes total surplus is procedures. economists often blame the health insurance system for excessive use of medical care. given your analysis, the use of care might be viewed as excessive because consumers get procedures whose value is than the cost of producing them.

Answers: 1

Answer

Business, 22.06.2019 05:00

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

Answers: 2

Answer

Business, 22.06.2019 21:10

Acompany has two products: standard and deluxe. the company expects to produce 36,375 standard units and 62,240 deluxe units. it uses activity-based costing and has prepared the following analysis showing budgeted cost and cost driver activity for each of its three activity cost pools.budgeted activity of cost driver activity cost pool budgeted cost standard deluxe activity 1 $ 93,000 2,500 5,250 activity 2 $ 92,000 4,500 5,500 activity 3 $ 87,000 3,000 2,800 what is the overhead cost per unit for the standard units? what is the overhead cost per unit for the deluxe units? (round activity rate and cost per unit answers to 2 decimal places.)activity expected costs expected activity driver activity rate1 93,000 2 92,000 3 87,000 standard activity activity driver activity rate allocated costs1 2 3

Answers: 2

Answer

Business, 22.06.2019 23:10

Jake and janelle loved to prepare gourmet meals for friends and family. they started a business of preparing theme-type dinners for friends who were having parties. to generate even more interest in the business, janelle created on her website. she posted pictures of events, and close-ups of the food they served. she encouraged patrons and others to post reviews, comments, and favorite recipes, and to share their own party ideas. her promotion became a dialogue between buyers of her service and the business. interactive promotion infomercials product placement broadcast

Answers: 2

Answer

You know the right answer?

The riteway ad agency provides cars for its sales staff. in the past, the company has always purchas...

Questions