Problem 1 (Equivalent Annual Cost EAC Total points 27) Company X is choosing a policy on the age at which to replace trucks in its fleet, which depends upon which truck line it chooses There are two (mutually exclusive) alternatives A) a 10 year truck that has initial (time ) price cost $25,000, annual maintenance cost of $1000 year and salvage value in year time 10 of 56000, or B) a 15 year truck that has initial (time ) price cost of $28,000, annual maintenance cost of $1500 year, and salvage value in year time 15 of $3000 All cash flows are after tax Discount rate 10 I recommend you first write down your calculator entries for step 1 (calculating the NPV of costs and step 2 (calculating the EAC) for each of the two trucks THEN you can go through and answer the questions based on what you have written down We begin with the three questions to calculate the NPV of costs for the 10 year truck (STEP 1 Part I a (STEP 1, 10 year truck ) To calculate the NPV of net costs for the 10 year truck, please indicate your calculator entries for N and 1 4, where N is a simple integer (es 20 for 20 periods) and I Y is recorded as xx x (to one decimal, recorded as percentage points per the calculator) N 1 Y Question 2 2 pts Problem 1 Part I b (STEP I, 10 year truck ) To calculate the NPV of net costs for the 10 year truck please indicate your calculator entries for PMT and FV Note You need to include All cash flows in the Step 1 calculation However, the initial (time ) truck cost will be counted in partic, NOT here (Please indicate EXACTLY how you enter the corresponding value in the calculator, eg, 1 000 for positive 1,000 dollars (no $ signs, with comma as needed, no decimal point, round to nearest dollar), 1,000 for negative one thousand dollars Be sure to enter a negative ( ) for a cash outflow (cost) and a positive (without a or ) for money you receive (cash inflow) PMT FV Question 3 2 pts Problem 1 Partic (STEP 1, 10 year truck) What is the NPV lofnet costs) for the 10 year truck strategy (Hint Here, the new truck cost SHOULD be counted in this NPV as a time cost This is your bottom line answer for Step 1 and is rounded to the nearest dollar 25 145 028831 0 29 000 31,145 35 000 O 21 169 Question 4 2 pts Problem 1 Part 1 d (STEP 2 10 year truck ) In the next 3 questions (part Id f please indicate your entries calculations for the Equivalent Annual Cost of the 10 year truck We start (part 1 d) with your calculator entries for N and 1 Y, where is a simple integerle g 20 for 20 periods), and I Yis recorded as xox (to one decimal, recorded as percentage points per the calculator) N 1 Question 5 2 pts Problem 1 Partie (STEP 2, 10 year truck) to calculate the EAC for the 10 year truck what are your calculator entries for FV and PV (Please indicate how you enter the corresponding value in the calculator, er 1 000 for positive 1 000 dollars (no signs, with comma as needed, no decimal point, ROUND TO NEAREST DOLLAR) 1,000 for negative one thousand dollars You can enter a negative (1) for a cash outflow (cost or value of cost and a positive (without a or ) for money you receive cash inflow) FV PV Question 6 25 pts Problem 1 Part 1 (STEP 2 10 year truck) What is the Equivalent Annual Cost for the 10 year truck 3 445 1500 4,100 04692 5 000 5,696 Question 7 2 pts Problem 1 Partia (STEP 1, 15 YEAR TRUCK) To calculate the NPV of net costs for the 15 year truck, please indicate your calculator entries for N and 1 Y where is a simple integer les 20 for 20 periods, and I Y is recorded as xxx to one decimal recorded as percentage points per the calculator) Note A 15 year truck that has initial price cost of $28 000, annaltenance cost of $1 500 year, and salvage value after 15 years of $3000 The discount rate is 10 before N 1 Y Question 8 2 pts Problem 1 Part II b (STEP I, 15 year truck) To calculate the NPV of niet costs for the 15 year truck please indicate your calculator entries for PMT and FV Note You need to include ALL cash flows in the Step 1 calculation However, the initial time) truck cost will be counted in partic, NOT here (Please indicate EXACTLY how you enter the corresponding value in the cake 1,000 for positive 1,000 dollars (no signs with comma as needed, no decimal point round to nearest dollar) 1,000 for negative one thousand dollars Be sure to enter a negative for a cash outflow costo and a positive (without a or ) for money you receive cash info PMT FV Question 9 2 pts Problem 1 Partil ISTEP 1, 15 year truck ) What is the NPV (of net cost for the 15 year truck strategy (Hint Here, the new truck cost SHOULD be counted in this NPV as a time cost This is your bottom line answer for Step 1 and is rounded to the nearest dollar 0 36 40 38,691 39409 44500 47 500 O 17 309 Question 10 2 pts Problem 1 Part (STEP 2 15 year truck In the next 3 questions (part ild please indicate your entries calculations for the Equivalent Annual Cost of the 15 year truck We start partild) with your calculator entries for Nand 1 Y, where is a simple integer te 20 for 20 periods and I Y recorded as xxx to one decimal, recorded as percentage points per the calculator) N 1 4 Question 11 2 pts Problem 1 Part II (STEP 2, 15 year truck ) To calculate the Equivalent Annual Cost for the 15 year truck, what are your calculator entries for FV and PV (Please indicate how you enter the corresponding value in the calculator, eg 1 000 for positive 1,000 dollars (no 5 signs, with comma as needed, no decimal point ROUND TO NEAREST DOLLARI 1 000 for negative one thousand dollars You can enter a negative ( ) for a cash outflow cost or value of cost) and a positive without a or ) for money you receive cash Intlow ) FV PV Question 12 2 5 pts Problem 1 Part II f (STEP 2 15 year truck ) What is the equivalent Annual Cost for the 15 year truck O 2,276 O 3,567 0 4,100 O 4,692 0 4,787 5,087 5 151 5,851 6,245 Question 13 2 pts Problem 1 Final question Which truck should company X choose O 10 year truck 15 year truck No answer text provided No answer text provided Problem 1 (Equivalent Annual Cost EAC Total points 27) Company X is choosing a policy on the age at which to replace trucks in its fleet, which depends upon which truck line it chooses There are two (mutually exclusive) alternatives A) a 10 year truck that has initial (time ) price cost $25,000, annual maintenance cost of $1000 year and salvage value in year time 10 of 56000, or B) a 15 year truck that has initial (time ) price cost of $28,000, annual maintenance cost of $1500 year, and salvage value in year time 15 of $3000 All cash flows are after tax Discount rate 10 I recommend you first write down your calculator entries for step 1 (calculating the NPV of costs and step 2 (calculating the EAC) for each of the two trucks THEN you can go through and answer the questions based on what you have written down We begin with the three questions to calculate the NPV of costs for the 10 year truck (STEP 1 Part I a (STEP 1, 10 year truck ) To calculate the NPV of net costs for the 10 year truck, please indicate your calculator entries for N and 1 4, where N is a simple integer (es 20 for 20 periods) and I Y is recorded as xx x (to one decimal, recorded as percentage points per the calculator) N 1 Y Question 2 2 pts Problem 1 Part I b (STEP I, 10 year truck ) To calculate the NPV of net costs for the 10 year truck please indicate your calculator entries for PMT and FV Note You need to include All cash flows in the Step 1 calculation However, the initial (time ) truck cost will be counted in partic, NOT here (Please indicate EXACTLY how you enter the corresponding value in the calculator, eg, 1 000 for positive 1,000 dollars (no $ signs, with comma as needed, no decimal point, round to nearest dollar), 1,000 for negative one thousand dollars Be sure to enter a negative ( ) for a cash outflow (cost) and a positive (without a or ) for money you receive (cash inflow) PMT FV Question 3 2 pts Problem 1 Partic (STEP 1, 10 year truck) What is the NPV lofnet costs) for the 10 year truck strategy (Hint Here, the new truck cost SHOULD be counted in this NPV as a time cost This is your bottom line answer for Step 1 and is rounded to the nearest dollar 25 145 028831 0 29 000 31,145 35 000 O 21 169 Question 4 2 pts Problem 1 Part 1 d (STEP 2 10 year truck ) In the next 3 questions (part Id f please indicate your entries calculations for the Equivalent Annual Cost of the 10 year truck We start (part 1 d) with your calculator entries for N and 1 Y, where is a simple integerle g 20 for 20 periods), and I Yis recorded as xox (to one decimal, recorded as percentage points per the calculator) N 1 Question 5 2 pts Problem 1 Partie (STEP 2, 10 year truck) to calculate the EAC for the 10 year truck what are your calculator entries for FV and PV (Please indicate how you enter the corresponding value in the calculator, er 1 000 for positive 1 000 dollars (no signs, with comma as needed, no decimal point, ROUND TO NEAREST DOLLAR) 1,000 for negative one thousand dollars You can enter a negative (1) for a cash outflow (cost or value of cost and a positive (without a or ) for money you receive cash inflow) FV PV Question 6 25 pts Problem 1 Part 1 (STEP 2 10 year truck) What is the Equivalent Annual Cost for the 10 year truck 3 445 1500 4,100 04692 5 000 5,696 Question 7 2 pts Problem 1 Partia (STEP 1, 15 YEAR TRUCK) To calculate the NPV of net costs for the 15 year truck, please indicate your calculator entries for N and 1 Y where is a simple integer les 20 for 20 periods, and I Y is recorded as xxx to one decimal recorded as percentage points per the calculator) Note A 15 year truck that has initial price cost of $28 000, annaltenance cost of $1 500 year, and salvage value after 15 years of $3000 The discount rate is 10 before N 1 Y Question 8 2 pts Problem 1 Part II b (STEP I, 15 year truck) To calculate the NPV of niet costs for the 15 year truck please indicate your calculator entries for PMT and FV Note You need to include ALL cash flows in the Step 1 calculation However, the initial time) truck cost will be counted in partic, NOT here (Please indicate EXACTLY how you enter the corresponding value in the cake 1,000 for positive 1,000 dollars (no signs with comma as needed, no decimal point round to nearest dollar) 1,000 for negative one thousand dollars Be sure to enter a negative for a cash outflow costo and a positive (without a or ) for money you receive cash info PMT FV Question 9 2 pts Problem 1 Partil ISTEP 1, 15 year truck ) What is the NPV (of net cost for the 15 year truck strategy (Hint Here, the new truck cost SHOULD be counted in this NPV as a time cost This is your bottom line answer for Step 1 and is rounded to the nearest dollar 0 36 40 38,691 39409 44500 47 500 O 17 309 Question 10 2 pts Problem 1 Part (STEP 2 15 year truck In the next 3 questions (part ild please indicate your entries calculations for the Equivalent Annual Cost of the 15 year truck We start partild) with your calculator entries for Nand 1 Y, where is a simple integer te 20 for 20 periods and I Y recorded as xxx to one decimal, recorded as percentage points per the calculator) N 1 4 Question 11 2 pts Problem 1 Part II (STEP 2, 15 year truck ) To calculate the Equivalent Annual Cost for the 15 year truck, what are your calculator entries for FV and PV (Please indicate how you enter the corresponding value in the calculator, eg 1 000 for positive 1,000 dollars (no 5 signs, with comma as needed, no decimal point ROUND TO NEAREST DOLLARI 1 000 for negative one thousand dollars You can enter a negative ( ) for a cash outflow cost or value of cost) and a positive without a or ) for money you receive cash Intlow ) FV PV Question 12 2 5 pts Problem 1 Part II f (STEP 2 15 year truck ) What is the equivalent Annual Cost for the 15 year truck O 2,276 O 3,567 0 4,100 O 4,692 0 4,787 5,087 5 151 5,851 6,245 Question 13 2 pts Problem 1 Final question Which truck should company X choose O 10 year truck 15 year truck No answer text provided No answer text provided

Question

Problem 1 (Equivalent Annual Cost EAC  Total points  27) Company X is choosing a policy on the age at which to replace trucks in its fleet, which depends upon which truck line it chooses  There are two (mutually exclusive) alternatives A) a 10 year truck that has initial (time ) price cost $25,000, annual maintenance cost of $1000 year and salvage value in year time 10 of 56000, or B) a 15 year truck that has initial (time ) price cost of $28,000, annual maintenance cost of $1500 year, and salvage value in year time 15 of $3000 All cash flows are after tax  Discount rate   10  I recommend you first write down your calculator entries for step 1  (calculating the NPV of costs and step 2  (calculating the EAC) for each of the two trucks  THEN you can go through and answer the questions based on what you have written down We begin with the three questions to calculate the NPV of costs for the 10 year truck (STEP 1 Part I a  (STEP 1, 10 year truck ) To calculate the NPV of net costs for the 10 year truck, please indicate your calculator entries for N and 1 4, where N is a simple integer (es  20 for 20 periods)  and I Y is recorded as xx x (to one decimal, recorded as percentage points per the calculator) N  1 Y Question 2 2 pts Problem 1  Part I b  (STEP I, 10 year truck ) To calculate the NPV of net costs for the 10 year truck please indicate your calculator entries for PMT and FV  Note  You need to include All cash flows in the Step 1 calculation  However, the initial (time ) truck cost will be counted in partic, NOT here  (Please indicate EXACTLY how you enter the corresponding value in the calculator, eg, 1 000 for positive 1,000 dollars (no $ signs, with comma as needed, no decimal point, round to nearest dollar),  1,000 for negative one thousand dollars  Be sure to enter a negative ( ) for a cash outflow (cost) and a positive (without a   or  ) for money you receive (cash inflow) PMT  FV  Question 3 2 pts Problem 1  Partic (STEP 1, 10 year truck) What is the NPV lofnet costs) for the 10 year truck strategy  (Hint  Here, the new truck cost SHOULD be counted in this NPV as a time cost  This is your  bottom line answer for Step 1 and is rounded to the nearest dollar 25 145 028831 0 29 000 31,145 35 000 O 21 169 Question 4 2 pts Problem 1  Part 1 d  (STEP 2  10 year truck ) In the next 3 questions (part Id f  please indicate your entries calculations for the Equivalent Annual Cost of the 10 year truck  We start (part 1 d) with your calculator entries for N and 1 Y, where is a simple integerle g  20 for 20 periods), and I Yis recorded as xox (to one decimal, recorded as percentage points per the calculator) N  1  Question 5 2 pts Problem 1  Partie (STEP 2, 10 year truck) to calculate the EAC for the 10 year truck what are your calculator entries for FV and PV  (Please indicate how you enter the corresponding value in the calculator, er 1 000 for positive 1 000 dollars (no signs, with comma as needed, no decimal point, ROUND TO NEAREST DOLLAR)  1,000 for negative one thousand dollars  You can enter a negative (1) for a cash outflow (cost or value of cost and a positive (without a   or  ) for money you receive cash inflow)  FV  PV  Question 6 25 pts Problem 1  Part 1 (STEP 2  10 year truck) What is the Equivalent Annual Cost for the 10 year truck 3 445 1500 4,100 04692 5 000 5,696 Question 7 2 pts Problem 1  Partia (STEP 1, 15 YEAR TRUCK) To calculate the NPV of net costs for the 15 year truck, please indicate your calculator entries for N and 1 Y where is a simple integer les 20 for 20 periods, and I Y is recorded as xxx to one decimal recorded as percentage points per the calculator) Note  A 15 year truck that has initial price cost of $28 000, annaltenance cost of $1 500 year, and salvage value after 15 years of $3000  The discount rate is 10  before N  1 Y  Question 8 2 pts Problem 1  Part II b  (STEP I, 15 year truck) To calculate the NPV of niet costs for the 15 year truck please indicate your calculator entries for PMT and FV  Note  You need to include ALL cash flows in the Step 1 calculation  However, the initial time) truck cost will be counted in partic, NOT here  (Please indicate EXACTLY how you enter the corresponding value in the cake 1,000 for positive 1,000 dollars (no signs with comma as needed, no decimal point round to nearest dollar)   1,000 for negative one thousand dollars  Be sure to enter a negative for a cash outflow costo and a positive (without a  or  ) for money you receive cash info PMT  FV  Question 9 2 pts Problem 1  Partil ISTEP 1, 15 year truck ) What is the NPV (of net cost for the 15 year truck strategy (Hint  Here, the new truck cost SHOULD be counted in this NPV as a time cost  This is your  bottom line answer for Step 1 and is rounded to the nearest dollar 0 36 40 38,691 39409 44500 47 500 O 17 309 Question 10 2 pts Problem 1  Part (STEP 2  15 year truck  In the next 3 questions (part ild please indicate your entries calculations for the Equivalent Annual Cost of the 15 year truck  We start partild) with your calculator entries for Nand 1 Y, where is a simple integer te    20 for 20 periods and I Y recorded as xxx to one decimal, recorded as percentage points per the calculator) N  1 4 Question 11 2 pts Problem 1  Part II (STEP 2, 15 year truck ) To calculate the Equivalent Annual Cost for the 15 year truck, what are your calculator entries for FV and PV  (Please indicate how you enter the corresponding value in the calculator, eg  1 000 for positive 1,000 dollars (no 5 signs, with comma as needed, no decimal point  ROUND TO NEAREST DOLLARI   1 000 for negative one thousand dollars  You can enter a negative ( ) for a cash outflow cost or value of cost) and a positive without a   or  ) for money you receive cash Intlow ) FV  PV  Question 12 2 5 pts Problem 1  Part II f  (STEP 2  15 year truck ) What is the equivalent Annual Cost for the 15 year truck  O 2,276 O 3,567 0 4,100 O 4,692 0 4,787 5,087 5 151 5,851 6,245 Question 13 2 pts Problem 1  Final question  Which truck should company X choose  O 10 year truck 15 year truck No answer text provided No answer text provided  Problem 1 (Equivalent Annual Cost EAC  Total points  27) Company X is choosing a policy on the age at which to replace trucks in its fleet, which depends upon which truck line it chooses  There are two (mutually exclusive) alternatives A) a 10 year truck that has initial (time ) price cost $25,000, annual maintenance cost of $1000 year and salvage value in year time 10 of 56000, or B) a 15 year truck that has initial (time ) price cost of $28,000, annual maintenance cost of $1500 year, and salvage value in year time 15 of $3000 All cash flows are after tax  Discount rate   10  I recommend you first write down your calculator entries for step 1  (calculating the NPV of costs and step 2  (calculating the EAC) for each of the two trucks  THEN you can go through and answer the questions based on what you have written down We begin with the three questions to calculate the NPV of costs for the 10 year truck (STEP 1 Part I a  (STEP 1, 10 year truck ) To calculate the NPV of net costs for the 10 year truck, please indicate your calculator entries for N and 1 4, where N is a simple integer (es  20 for 20 periods)  and I Y is recorded as xx x (to one decimal, recorded as percentage points per the calculator) N  1 Y Question 2 2 pts Problem 1  Part I b  (STEP I, 10 year truck ) To calculate the NPV of net costs for the 10 year truck please indicate your calculator entries for PMT and FV  Note  You need to include All cash flows in the Step 1 calculation  However, the initial (time ) truck cost will be counted in partic, NOT here  (Please indicate EXACTLY how you enter the corresponding value in the calculator, eg, 1 000 for positive 1,000 dollars (no $ signs, with comma as needed, no decimal point, round to nearest dollar),  1,000 for negative one thousand dollars  Be sure to enter a negative ( ) for a cash outflow (cost) and a positive (without a   or  ) for money you receive (cash inflow) PMT  FV  Question 3 2 pts Problem 1  Partic (STEP 1, 10 year truck) What is the NPV lofnet costs) for the 10 year truck strategy  (Hint  Here, the new truck cost SHOULD be counted in this NPV as a time cost  This is your  bottom line answer for Step 1 and is rounded to the nearest dollar 25 145 028831 0 29 000 31,145 35 000 O 21 169 Question 4 2 pts Problem 1  Part 1 d  (STEP 2  10 year truck ) In the next 3 questions (part Id f  please indicate your entries calculations for the Equivalent Annual Cost of the 10 year truck  We start (part 1 d) with your calculator entries for N and 1 Y, where is a simple integerle g  20 for 20 periods), and I Yis recorded as xox (to one decimal, recorded as percentage points per the calculator) N  1  Question 5 2 pts Problem 1  Partie (STEP 2, 10 year truck) to calculate the EAC for the 10 year truck what are your calculator entries for FV and PV  (Please indicate how you enter the corresponding value in the calculator, er 1 000 for positive 1 000 dollars (no signs, with comma as needed, no decimal point, ROUND TO NEAREST DOLLAR)  1,000 for negative one thousand dollars  You can enter a negative (1) for a cash outflow (cost or value of cost and a positive (without a   or  ) for money you receive cash inflow)  FV  PV  Question 6 25 pts Problem 1  Part 1 (STEP 2  10 year truck) What is the Equivalent Annual Cost for the 10 year truck 3 445 1500 4,100 04692 5 000 5,696 Question 7 2 pts Problem 1  Partia (STEP 1, 15 YEAR TRUCK) To calculate the NPV of net costs for the 15 year truck, please indicate your calculator entries for N and 1 Y where is a simple integer les 20 for 20 periods, and I Y is recorded as xxx to one decimal recorded as percentage points per the calculator) Note  A 15 year truck that has initial price cost of $28 000, annaltenance cost of $1 500 year, and salvage value after 15 years of $3000  The discount rate is 10  before N  1 Y  Question 8 2 pts Problem 1  Part II b  (STEP I, 15 year truck) To calculate the NPV of niet costs for the 15 year truck please indicate your calculator entries for PMT and FV  Note  You need to include ALL cash flows in the Step 1 calculation  However, the initial time) truck cost will be counted in partic, NOT here  (Please indicate EXACTLY how you enter the corresponding value in the cake 1,000 for positive 1,000 dollars (no signs with comma as needed, no decimal point round to nearest dollar)   1,000 for negative one thousand dollars  Be sure to enter a negative for a cash outflow costo and a positive (without a  or  ) for money you receive cash info PMT  FV  Question 9 2 pts Problem 1  Partil ISTEP 1, 15 year truck ) What is the NPV (of net cost for the 15 year truck strategy (Hint  Here, the new truck cost SHOULD be counted in this NPV as a time cost  This is your  bottom line answer for Step 1 and is rounded to the nearest dollar 0 36 40 38,691 39409 44500 47 500 O 17 309 Question 10 2 pts Problem 1  Part (STEP 2  15 year truck  In the next 3 questions (part ild please indicate your entries calculations for the Equivalent Annual Cost of the 15 year truck  We start partild) with your calculator entries for Nand 1 Y, where is a simple integer te    20 for 20 periods and I Y recorded as xxx to one decimal, recorded as percentage points per the calculator) N  1 4 Question 11 2 pts Problem 1  Part II (STEP 2, 15 year truck ) To calculate the Equivalent Annual Cost for the 15 year truck, what are your calculator entries for FV and PV  (Please indicate how you enter the corresponding value in the calculator, eg  1 000 for positive 1,000 dollars (no 5 signs, with comma as needed, no decimal point  ROUND TO NEAREST DOLLARI   1 000 for negative one thousand dollars  You can enter a negative ( ) for a cash outflow cost or value of cost) and a positive without a   or  ) for money you receive cash Intlow ) FV  PV  Question 12 2 5 pts Problem 1  Part II f  (STEP 2  15 year truck ) What is the equivalent Annual Cost for the 15 year truck  O 2,276 O 3,567 0 4,100 O 4,692 0 4,787 5,087 5 151 5,851 6,245 Question 13 2 pts Problem 1  Final question  Which truck should company X choose  O 10 year truck 15 year truck No answer text provided No answer text provided

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Problem 1 (Equivalent Annual Cost EAC. Total points: 27) Company X is choosing a policy on the age at which to replace trucks in its

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