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mafiozo [28]
3 years ago
13

Hybrid cars are touted as a "green" alternative; however,the financial aspects of hybrid ownership are not as clear. Consider th

e 2018 Edsel 550h, which had a list price of $5200 (including tax consequences) more than the comparable Edsel550. Additionally, the annual ownership costs ( other than fuel) for the hybrid were expected to be $330 more than the traditional sedan. The EPA mileage estimates was 27 mpg for the hybris and 19mpg for the hybrid and 19 mpg for the traditional sedan.
A. Assume that gasoline costs $3.60 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile, ignoring the time value of money?
B. If you drive 15,500 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile, ignoring the time value of money?
C. Gasoline costs $3.60 per gallon and you plan to keep either car for six years. How many miles per year would you need to drive to make the decision to buy the hybrid worthwhile? Assume the appropriate interest rate is 10 percent and all cash flows occur at the end of the year.
D. If you drive 15,500 miles per year and keep either car for six years, what price per gallon would make the decision to buy the hybrid worthwhile? Assume the appropriate interest rate is 10 percent and all cash flows occur at the end of the year.
Business
1 answer:
lord [1]3 years ago
5 0

Answer:

a)

the hybrid model initially costs $5,200 more than the regular model, plus you have another $330 in extra ownership costs per year. If you plan to own the hybrid car for 6 years, then you must recoup $5,200 / 6 = $866.67 + $330 = $1,196.67 per year.

the cost of driving 1 mile with the hybrid car = $3.60 / 27 = $0.1333

the cost of driving 1 mile with the regular model = $3.60 / 19 = $0.1895

you will save = $0.0562 per mile driven

you would need to drive $1,196.67 / $0.0562 = 21,293 miles per year to make the decision worth it

b)

if you only drive 15,500 miles per year, then you would need to save $0.0772 per mile

that would only result if gasoline's price was:

x/19 - x/27 = 0.0772

0.0526x - 0.037x = 0.0772

0.0156x = 0.0772

x = 0.0772 / 0.0156 = $4.95 per gallon

c)

you must first determine the present value of all additional expenses related to purchasing a hybrid:

year         cash flow

0                -5,200

1                 -330

2                -330

3                -330

4                -330

5                -330

6                -330

Using a financial calculator, the PV = -$6,637.24

now we must use an annuity formula to determine the annual savings required using a 10% discount rate and 6 periods:

annual savings = $6,637.24 / 4.3553 (PV annuity factor, 10%,  6 periods) = $1,523.95

so you must save $1,523.95 per year and that is equivalent to $1,523.95 / $0.0562 = 27,116.47 = 27,116 miles

d)

you also need to save $1,523.95, but you only drive 15,500 miles, so the savings per mile = $0.0983

x/19 - x/27 = 0.0983

0.0526x - 0.037x = 0.0983

0.0156x = 0.0983

x = 0.0983 / 0.0156 = $6.30 per gallon

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poizon [28]

Answer:

interest expense for October $ 27.25

Explanation:

       900

+  1,300 x 20/30

<u> +     100 x 15/30    </u>

1,816.67 average balance

Now we multiply this average balance by the interest rate of the credit card:

1,816.67 x 0.18/ 12 = 27.25

4 0
3 years ago
In September, Year 1, West Corp. made a dividend distribution of one right for each of its 120,000 shares ofoutstanding common s
Sphinxa [80]

Answer:

The correct answer is option C.

Explanation:

Dividend distribution in the first year = 120,000 shares of outstanding common stock

Each right was exercisable.

Though none of the rights have been exercised.

The shares have been redeemed by paying each stockholder=$0.10/right

Reduction in the West's stockholder's equity

=Number of shares*amount paid for redemption

=120,000*$.10

=$12,000

So, option C is the right answer.

8 0
3 years ago
Hiring decisions at Maarja's Razors are made by Maimu Maarja, the Director of Human Resources. Pay rates are approved by the Vic
barxatty [35]

Answer:

Effective

Explanation:

Segregation of duties (SOD) is an essential part of the effectiveness of internal controls for any business. This integral separation ensures that key processes are performed by more than one person to prevent fraud or financial misstatement. While technology continues to become more sophisticated, the time is now to implement controls that segregate key functions within processes such as cash disbursements, investments, payroll, and many other areas.

Maarja's Razors is implementing effectively the segregation of duties. Key processes are performed by more than one person, and this helps in flexibility of operations.

4 0
3 years ago
Read 2 more answers
jazz world inc. is considering a project that has the following cash flow and wacc data. what is the project's npv? note that a
Marianna [84]

The project's projected NPV is $185.11. (second option)

<h3>What is the NPV?</h3>

Net present value is the present value of after-tax cash flows from an investment less the amount invested. Only projects with a positive NPV should be accepted.

A project with a negative NPV should not be chosen because it isn't profitable. NPV is calculated by taking the present value of all cash flows over the life of a project. Then, the present value of cash flows is subtracted from the investment's initial investment

NPV = -1200 + 400 / 1.0975 + 425 / 1.0975² + 450 / 1.0975³ + 475 / 1.0975^4

= $185.11

To learn more about net present value, please check: brainly.com/question/25748668

#SPJ1

8 0
1 year ago
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year
Anna71 [15]

Answer:

18.49%

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

The IRR can be calculated using a financial calculator:

Cash flow in year 0 = –$28,500

Cash flow in year 1 = $12,500

Cash flow in year 2 = 15,500

Cash flow for year 3 = $11,500

IRR = 18.49%

To find the IRR using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.

I hope my answer helps you

5 0
3 years ago
Read 2 more answers
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