Analyzing and Interpreting Restructuring Costs and Effects

You are trying to pick the least-expensive car for your new delivery service. You have two choices: the Scion xA, which will cos

PilotLPTM [1.2K]

Answer:

EAC of Scion xA= 12,429.24

EAC of Toyota = $11,922.02

The Toyota should selected because it has a lower EAC

Explanation:

Equivalent Annual cost = PV of cost/Annuity factor

<em>Scion xA</em>

PV of OCF= A × (1- (1+r)^(-n)/n

= 2,900 × (1 -(1.13)^(-3))/0.13=6847.342534

PV of total cost = 22,500 + 6847.34 = 29,347.34253

EAC = 29,347.34/ 2.361152598= 12429.24433

EAC = 12429.24

<em>EAC Toyota</em>

PV of OCF = 1500×(1 -(1.13)^(-4))/0.13= 4461.706988

PV of total cost = 31,000 + 4461.7069= 35,461.70699

EAC = 35,461.706/ 2.9744 = 11,922.02

EAC = $11,922.02

EAC of Scion xA= 12429.24

EAC of Toyota = $11,922.02

4 0

4 years ago

An investment, which has an expected return of 5.9%, is expected to make annual cash flows forever. The first annual cash flow i

leonid [27]

Answer:

$3,980.82

Explanation:

Rate per annum = 5.9%

Number of years = 3

No of compounding per annum = 1

Rate per period = 5.9%

Number of period = 3

Future value = 4500*(1+0.025)^2 = $4727.81

PV of 3 years cashflow = Fv * [1/[(1+r)^n]]

PV of 3 years cashflow = $4727.81 * [ 1 / (1+5.9%)^3]

PV of 3 years cashflow = $4727.81 * [1 / 1.059^3]

PV of 3 years cashflow = $4727.81 * 1/1.187648379

PV of 3 years cashflow = $4727.81 * 0.842000057

PV of 3 years cashflow = $3980.81628948517

PV of 3 years cashflow = $3,980.82

3 0

3 years ago

Which decision rule requires the consumer to rank the evaluative criteria in terms of their importance and to establish a cutoff

saul85 [17]

Best answer is b on e2020

3 0

3 years ago

Shatin Intl. has 10 million shares, an equity cost of capital of 13% and is expected to pay a total dividend of $20 million each

Zanzabum

Answer:

23.07 per share

Explanation:

$\frac{divends}{return-growth} = Intrinsic \: Value$

We will caltulate like the gordon model, but in this case growth= 0 and we are going to include the 10 millions stock repurchase in the dividend part of the equation.

Stock price= (future value of total dividends + repurchasing of stocks)/equity cost of capital)

(20 + 10)/0.13 = 230.77 MILLIONS

Then we divide by the number of shares:

230.77 MILLIONS/ 10 MILLIONS = 23.07 per share

3 0

3 years ago

Which of the following is a standard that defines how accountants record financial transactions?

Mashutka [201]

Answer: Generally Accepted Accounting Principles

Explanation:

Just finished the test

7 0

3 years ago