1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
puteri [66]
2 years ago
15

You are starting a family pizza parlor and need to buy a motorcycle for delivery orders. You have two models in mind. Model A co

sts $8,200 and is expected to run for 7 years; Model B is more expensive, with a price of $13,600, and has an expected life of 9 years. The annual maintenance costs are $760 for Model A and $740 for Model B. Assume that the opportunity cost of capital is 9 percent. Calculate equivalent annual costs (EAC) of each models.
Business
1 answer:
harina [27]2 years ago
8 0

The equivalent annual costs of each model are as follows:

                                                Model A       Model B

Equivalent annual costs     $2,389.26   $3,008.47

Data and Calculations:

                                              Model A       Model B

Costs of motorcycle              $8,200        $13,600

Expected years of usage      7 years        9 years

Annual maintenance costs    $760          $740

Cost of capital = 9%

Annuity factor                       5.03295        5.99524

PV of annual maintenance  $3,825.04   $4,436.48

Total NPV of costs             $12,025.04  $18,036.48

Equivalent annual costs   $2,389.26  $3,008.47

                          ($12,025.04/5.03295)  ($18,036.48/5.99524)

Thus, the equivalent annual costs of each model are the dividend of the Total NPV costs divided by the Annuity Factor.

Learn more about the equivalent annual costs (EAC) here: brainly.com/question/25343720

You might be interested in
Baxter company produces children's wiffle ball sets using a three-step sequential process that includes molding, coloring, and f
Nikitich [7]
<span>when the sets are completely finished, the cost should be transferred to: </span>W<span>IP inventory-Finishing
WIP stands for work in progress, which is an account to placed all the amount of manufactured product that still not ready to be sold to the market.
Since the manufacter process is in finishing stage (coloring/packing), the appropriate account should be </span>WIP inventory-Finishing
3 0
3 years ago
What makes australian economy so prosperous?
Setler79 [48]
<span>Capitalist economic policies caused Kenya's economy to prosper.</span>
3 0
3 years ago
3. Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest X-Men comic. He ha
Vladimir [108]

Answer:

It should listen to his mother.

Explanation:

This week cash flow handled the fixed cost of 10 to Raymond's brother.

His father is not considering that so it thinks the business flops.

Now that fixed cost are paid the following weeks his gains will increase entirely based on the sales volume so, it is better to continue the business for the next three weeks.

6 0
3 years ago
What is one drawback shared by both monopolies and oligopolies?
garik1379 [7]

Answer:A.They can harm consumers by fixing prices.

3 0
3 years ago
Establishing international treaties that ban the transfer of potentially harmful species from one country to another is a good w
Anna35 [415]
Establishing international treaties .............................. is a good way to control INTRODUCTION OF INVASIVE SPECIES.
Invasive species are those animal species which are removed from a different ecosystem and are brought to a new ecosystem, where they cause damages to other species which originally inhabit the ecosystem. Invasive species can wipe out the native species thus disrupting the ecosystem.
6 0
3 years ago
Other questions:
  • A corporation must have a registered agent within the state of incorporation only if the corporation maintains an office in that
    10·1 answer
  • Communication apprehension is also know as stage fright. True or false
    8·1 answer
  • Jeff is a manager at a paper mill. he has received a grievance from a group of employees who are union members. the grievance cl
    13·1 answer
  • Angell Inc. hired you as a consultant to help them estimate their cost of capital. You have been provided with the following dat
    14·1 answer
  • Dave Fletcher was able to determine the activity times for constructing his laser scanning machine. Fletcher would like to deter
    10·1 answer
  • The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $600. The bad debts are estim
    15·2 answers
  • The marginal productivity theory of resource demand suggests that those resources whose productivity levels are high will end up
    5·1 answer
  • A. He should utilize lean manufacturing.
    7·1 answer
  • A share of stock sells for $53 today. The beta of the stock is .7 and the expected return on the market is 16 percent. The stock
    6·1 answer
  • Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an ann
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!