GRADED ASSIGNMENT 1: GANGES EXPRESS

Ganges Express, a package delivery company, operates a fleet of Volvo trucks at one terminal where the lease of 175,000 euros per year is expiring. They had planned to set up another lease with Volvo for next three years at a cost of 200,000 euros per year in operating expenses. This is the total cost for the entire fleet. A Scania sales rep just called to offer a discounted price of 700,000 euros for Ganges to purchase a new fleet (instead of leasing). If the new fleet is purchased, then Ganges expects to sell the Scania trucks at book value at the end of three years. They use straight-line depreciation over 5 years for new vehicles. Assume the tax rate is 30% and the discount rate for Ganges Express is 10%. Ignore inflation.

Part 1

(1 point possible)

Be sure to enter all of your answers in thousands of Euros without commas or currency signs. Round your answers to the closest thousands, e.g., if you answer is 23,495.45 then you would enter 23 and if your answer was 87,567 you would enter 88.

Remember that Check Answer checks all of the questions in this Part at the same time.

What is the projected EBIT for year 1 in thousands of Euros?

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What is the projected EBIT for year 2 in thousands of Euros?

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What is the projected EBIT for year 3 in thousands of Euros?

Part 3

We next want to find the projected Free Cash Flows immediately and for years 1-3.

Be sure to enter all of you answers in thousands of Euros without commas or currency signs. Round your answers to the closest thousands, e.g., if you answer is 12,634 then you would enter 13 and if your answer was -4,228.49 you would enter -4.

Remember that Check Answer checks all of the questions in this Part at the same time.

What are the projected Free Cash Flows immediately in thousands of Euros?

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What are the projected Free Cash Flows for year 1 in thousands of Euros?

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What are the projected Free Cash Flows for year 2 in thousands of Euros?

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What are the projected Free Cash Flows for year 3 in thousands of Euros?

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We next want to find the projected Free Cash Flows immediately and for years 1-3.

Be sure to enter all of you answers in thousands of Euros without commas or currency signs. Round your answers to the closest thousands, e.g., if you answer is 12,634 then you would enter 13 and if your answer was -4,228.49 you would enter -4.

Remember that Check Answer checks all of the questions in this Part at the same time.

What are the projected Free Cash Flows immediately in thousands of Euros?

unanswered

What are the projected Free Cash Flows for year 1 in thousands of Euros?

unanswered

What are the projected Free Cash Flows for year 2 in thousands of Euros?

unanswered

What are the projected Free Cash Flows for year 3 in thousands of Euros?

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Part 4

We next want to look at the discount rate under which Ganges Express would purchase the Scania trucks.

Enter your answer as a percentage with one decimal place, e.g., if you answer is 6.25% then you would enter 6.3 and if your answer was 41.81% then you would enter 41.8. Enter 0 if there is no positive discount rate under which Ganges would pursue this option.

What is the highest discount rate under which Ganges Express would choose to purchase the Scania trucks? Ensure that spreadsheet cell formatting is changed to decimal numbers as required

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Part 4

(1 point possible)

We next want to look at the discount rate under which Ganges Express would purchase the Scania trucks.

Enter your answer as a percentage with one decimal place, e.g., if you answer is 6.25% then you would enter 6.3 and if your answer was 41.81% then you would enter 41.8. Enter 0 if there is no positive discount rate under which Ganges would pursue this option.

What is the highest discount rate under which Ganges Express would choose to purchase the Scania trucks? Ensure that spreadsheet cell formatting is changed to decimal numbers as required

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Part 5

To conclude this analysis, we what want to calculate the Payback Period for the purchase of Scania trucks.

What is the Payback Period for the purchase of Scania trucks? Enter your answer rounded to two decimal places of a year, e.g., if your answer is 13.784 years, enter 13.78 and if your answer is 9.125 enter 9.13.

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Part 5

(1 point possible)

To conclude this analysis, we what want to calculate the Payback Period for the purchase of Scania trucks.

What is the Payback Period for the purchase of Scania trucks? Enter your answer rounded to two decimal places of a year, e.g., if your answer is 13.784 years, enter 13.78 and if your answer is 9.125 enter 9.13.