Problem
1. A company must decide whether to provide their salesmen with company-owned automobiles or to pay the salesmen a mileage allowance and have them drive their own automobiles. New automobiles would cost about 18.000 each and could be resold 4 years later for about 7000 each. Annual operating costs would be 600 per year plus 0.12 per kilometer. If the salesmen drove their own automobiles, the company probably would pay them 0.30 per kilometer. Calculate the number of kilometers each salesman would have to drive each year for it to be economically practical for the company to provide the automobiles. Assume a 10% annual interest rate. Use an annual cash flow analysis.
2. Your company must make a 500.000 balloon payment on a lease 2 years and 9 months from today. You have been directed to deposit an amount of money quarterly, beginning today, to provide for the 500.000 payment. The account pays 4% per year, compounded quarterly. What is the required quarterly deposit? Lease payments are due at beginning of the quarter.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.