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Anestetic [448]
3 years ago
7

Suppose that you have the option to buy the car with a 3 year car loan or lease the car during the same period of time. The 3 ye

ar lease option will require a $3,000 down payment and monthly payments of $350. If the salvage value of the new vehicle after 3 years is $5,000 and you can invest at a rate of return of 4%, what is your best option? (Ignore your old vehicle.)
Business
1 answer:
Len [333]3 years ago
3 0

Missing Question Data:

The question was missing the total amount of loan taken. I have found the question online and the missing data is added below.

Explanation:

DATA:

Car Loan = $15000

Interest Rate (annual) = 7% = 0.07

Interest Rate (monthly) = 0.07/12 = 0.00583

Loan Life = 3 years

Period (monthly) = 3*12 = 36

Investment Rate (annual) = 4% = 0.04

Investment Rate (monthly) = 0.04/12 = 0.00333

Salvage value after 3 years (PV of Salvage Value) = $5000

Lease Down Payment = $3000

Lease Monthly Payment = $350

<h3>First, we consider the option of Buying on Loan</h3>

Car Loan - Salvage Value(PV) = 15000-5000

Car Loan - Salvage Value(PV) = $10000

<h3>For the option of Leasing the Car</h3>

Sum of monthly lease payments for the total period will be,

Sum of Installments (FV) = 350 * 12 = $12600

We know that,

PV\;=\;\frac{FV}{(1\;+\;r)^{n}}\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;\;(here\;n\;=\;4\%\;=\;0.00333)

Sum of Installments (PV) = \frac{12600}{(1\;+\;0.00333)^{36}}

Sum of Installments (PV) = $11178.76

Total Lease Payment = Down Payment + Sum of Installments (PV)

Total Lease Payment = $3000 + $ 11178.76

Total Lease Payment = $14178.76

As we can see that total investment for Loan option is lower than that of Lease option, hence taking Loan is the best choice.

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Wendell Company provided the following pertaining to its recent year of operation:
myrzilka [38]

Answer:

Option (B) is correct.

Explanation:

Wendell's total stockholders' equity increase during the recent year of operation:

= Issued common stock - Cash dividend declared + Net Income - Stock dividend distributed + Sale of treasury stock below cost

= $50,000 - $20,000 + $70,000 - $23,000 + $7,000

= $84,000

Therefore, Wendell's total stockholders' equity increase by $84,000.

3 0
3 years ago
Some companies use automated payment processing technology in which paper checks that may arrive at a lockbox are converted into
Otrada [13]

<span>The answer in the given statement above is the accounts receivable conversion. This type of process allows an individual to receive the amount that he or she converts from paper check into a real amount when scanned under an electronic machine in which is being described above.</span>

5 0
2 years ago
Missionary selling:
Valentin [98]

Missionary selling is often an entry position for higher level sales and marketing jobs.

Option D

<u>Explanation: </u>

An inventive missionary retailer can sell a business two or three times. Missionary sales jobs are often a road to orders.

Missionary selling is a type of sales by which a salesperson advises a person who affects the purchase decision. The purpose is not to end a sale but simply to obtain information from the main decision-maker. It is an indirect sale method.

Missionary employment in scientific, pharmacy and textbook sales is quite common.

Professional companies such as IBM and Xerox depend on missionary vendors for program specialists. Systems specialists collaborate with clients to overcome scientific or organizational challenges. Salespeople tell about innovative items that offer alternatives in the process of finding solutions. A technical expert who advises an organization to minimize its product shipping time may, for example, suggest a software program that simplifies the shipping process.

5 0
3 years ago
A JIT system uses kanban cards to authorize movement of incoming parts. In one portion of the system, a work center uses an aver
ycow [4]

Answer: 4 containers

Explanation:

The formula used to get the number of containers that are needed will be:

N = DT(1+X)/C

where,

N = total containers

D = planned usage rate used by the work center = 111 parts per hour

T = average waiting time = 100 minutes = 100/60 hours = 1.67 hours

X = inefficiency factor = 0.21

C = capacity of standard container = 5 dozens = 5 × 12 = 60 parts

N = DT(1+X)/C

N = (111 × 1.67)(1 + 0.21)/60

N = (185.37 × 1.21)/60

N = 224.2977/60

N = 3.738

N = 4 approximately

4 containers will be needed

4 0
3 years ago
Tanek Corp.’s sales slumped badly in 2017. For the first time in its history, it operated at a loss. The company’s income statem
Levart [38]

Answer:

a) Break-even point in dollar for 2017

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = (Sales - Variable Cost)/Sales

C.M Ratio = $(2,500,000-1,750,000)/2,500,000

C.M Ratio = 0.30 or 30%

Break-even point in dollars = Fixed expense/C.M Ratio

B-E point ($) = $850,000/0.30

= $2,833,333.33

<u>Alternative 1</u>

<em>Sales Price per unit after increasing 20%,</em>

Sales Price = ($5*0.2) + $5 = $6

Total Sales ($) = (Sales Price x Sales Units)

Total Sales ($) = ($6*500,000) =$3,000,000

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = ($3,000,000- $1,750,000)/$3,000,000

C.M Ratio = 0.42 or 42%

Break-even point in dollars = Fixed expense/C.M Ratio

B-E point ($) = $850,000/0.42

= $2,023,809.52

<u>Alternative 2</u>

<em>Commission</em> = $2,500,000*5% = $125,000

Change in fixed annual salaries = $150,000-$60,000 = $90,000

Total fixed costs after deducting the changes in fixed salaries = $850,000-$90,000 = $760,000

Contribution margin ratio = Contribution Margin/Sales

C.M Ratio = (Sales - Variable Cost - Commission on sales)/Sales

C.M Ratio = ($2,500,000-$1,750,000-$125,000)/$2,500,000

C.M Ratio = 0.25 or 25%

Explanation:

Sales = $2,500,000

Sales Unit = $2,500,000/500,000 = $5

Variable Cost = 1,750,000

Fixed costs = $850,000

7 0
3 years ago
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