Question
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount
Gateway Tours is choosing between two bus models. One is more expensive to purchase and maintain but lasts much longer than the other. Gateway's discount rate is
11.4%.
The company plans to continue with one of the two models for the foreseeable future. Based on the costs of each shown below, which should it choose? (Note: dollar amounts are in thousands.)
| Model | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 |
| Old Reliable | $201 | $4.1 | $4.1 | $4.1 | $4.1 | $4.1 | $4.1 | $4.1 |
| Short and Sweet | $102 | $2.1 | $2.1 | $2.1 | $2.1 |
Based on the costs of each model, which should it choose?(Select the best choice below.)
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Financial Institutions And Markets
Authors: Jeff Madura
10th International Edition
0538482176, 9780538482172
