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Please show BA II Plus Financial Calculator calculations and inputs so I can understand how to do similar problems. Thanks Palm Cay, Inc, plans to
Please show BA II Plus Financial Calculator calculations and inputs so I can understand how to do similar problems. Thanks
Palm Cay, Inc, plans to purchase a new metal stamping machine for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The engineering department has determined that each vendor's stamping machine is substantially identical and each has a useful life of 30 years. In addition, engineering has estimated that required year-end maintenance costs will be $3,000 per year for the first 10 years, $5,000 per year for the next 10 years, and $12,000 per year for the last 10 years. Vendor A: $40,000 cash at the time of delivery and 5 year end payments of $50,000 each. Vendor A offers all its customers the right to purchase at the time of sale a separate 30-year maintenance service contract, under which Vendor A will perform all year-end maintenance at a one-time initial cost of $47,000. Vendor B: Forty- semi-annual payments of $14,000 each, with the first installment due upon delivery. Vendor B will perform all year-end maintenance for the next 30 years at no extra charge. Vendor C: Full cash price of $225,000 will be due upon delivery. Instructions: Assuming that both Vendors A and B will be able to perform the required year-end maintenance, and that Palm Cay's cost of funds is 8%, and the machine will be purchased on January 1, from which Vendor should they purchase the machine from? Please be sure to show all TVM calculations. There will be no credit if your answer are not supported by your calculations. Palm Cay, Inc, plans to purchase a new metal stamping machine for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The engineering department has determined that each vendor's stamping machine is substantially identical and each has a useful life of 30 years. In addition, engineering has estimated that required year-end maintenance costs will be $3,000 per year for the first 10 years, $5,000 per year for the next 10 years, and $12,000 per year for the last 10 years. Vendor A: $40,000 cash at the time of delivery and 5 year end payments of $50,000 each. Vendor A offers all its customers the right to purchase at the time of sale a separate 30-year maintenance service contract, under which Vendor A will perform all year-end maintenance at a one-time initial cost of $47,000. Vendor B: Forty- semi-annual payments of $14,000 each, with the first installment due upon delivery. Vendor B will perform all year-end maintenance for the next 30 years at no extra charge. Vendor C: Full cash price of $225,000 will be due upon delivery. Instructions: Assuming that both Vendors A and B will be able to perform the required year-end maintenance, and that Palm Cay's cost of funds is 8%, and the machine will be purchased on January 1, from which Vendor should they purchase the machine from? Please be sure to show all TVM calculations. There will be no credit if your answer are not supported by your calculationsStep by Step Solution
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