- +1-530-264-8006
- info@tutorsglobe.com

What is the present worth if alkoma purchases the truck

The Alkoma Company needs to acquire a new lift truck for transporting its final product to the ware house. One alternative is to purchase the truck for $40000 which will be financed by the bank at an annual interest rate of 8%. The loan must be repaid in four equal installments, payable at the end of each year. If they purchase the truck, Alkoma estimates the maintenance costs at $0.10/km, payable at the end of each year. The truck has an expected salvage value of $10,000 after four years. Alternatively Alkomacould lease the truck under a four-year contract for a lease payment for a lease payment of $11,000 per year, with no charge per kilometer up to 40,000 km/year. Each annual lease payment must be made at the beginning of the year. The truck would be maintained by the lessor. After four years, Alkoma plans to replace the truck irrespective of whether it leases or buys. Based on historical records, they drive the truck about 20,000 km per year. Alkoma has a MARR (minimum attractive rate of return) of 15%. Ignore taxes and depreciation.

a) What is the Present Worth if Alkoma purchases the truck?

b) What is the Present Worth if Alkoma leases the truck?

c) Should the truck be leased or purchased?

d) How many kilometers per year would Alkoma have to use the truck to be indifferent between purchasing and leasing?

Now Priced at $40 (50% Discount)

Recommended **(94%)**

A
Anonymous user ## 4/19/2016 3:38:12 AMThis assignment is illustrate to a new lift truck for transporting its final product as well have to purchase the truck on showing earnings The Alkoma Company requires acquiring a new lift truck for transporting its final product to the ware house. One alternative is to purchase the truck for $40000 which will be financed via the bank at an annual interest rate of 8%. The loan must be repaid in 4 equivalent installments, payable at the finish of each year. If they purchase the truck, Alkoma approximations the preservation costs at $0.10/km, payable at the end of each year. The truck has a supposed salvage value of $10,000 after 4 years. Alternatively Alkoma could lease the truck under a four-year contract for a lease payment for a lease payment of $11,000 per year, with no charge per kilometer up to 40,000 km/year. Each annual lease payment must be made at the starting of the year. |

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment2015 © Tutors Globe. All rights reserved.

## Q : 1during 2013 its first year of operations baginski steel

1during 2013 its first year of operations baginski steel corporation reported an operating loss of 375000 for financial