QUESTION 2 (38 marks) Door2DoorCo are a large courier company who have just received a shipment of X new vans. They wish to lock in a tyre supply contract to keep these vans well shod over the Y months that they intend to keep the vans. The vans come with low quality tyres that will need to be replaced in 2 months Two suppliers, ThriftyTread and WiserWheels have expressed interest at supplying tyres at a fixed price for the duration. The offers are summarised below: Gamma or Delta Assignment Allocation Number of Vans, X Corporate Discount Rate Initial Tyre Life Keep vans for (Y) ThriftyTread Alpha or Beta 120 100 J 14.03% p.a. J 12.68% p.a = 2 months. 2 months 50 months 38 months $100.00 $100.00 Tyre price Tyre life Tyres replaced at Four months Four months 2, 6, 10,., 46, 50 months 2, 6, 10,, 34, 38 months WiserWheels Tyre price Tyre life Tyres replaced at $148.00 $77.50 Three months Six months 2, 5, 8,, 35, 38 months 2, 8, 14, 44, 50 months For each of the two potential suppliers, illustrate Door2DoorCo's tyre expenditure for the new vans as a fully labelled timeline diagram. (Remember that there are X a) new vans, and assume each van has 4 tyres.) [3+3=6 marks b) Determine the value in period 2 dollars of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [Hint, you will firstly need to find the ja rate equivalent to the corporate discount rate, you will then need to find the PV of the expenditure stream in period 2 dollars] 8 marks c) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [NB this is a bit tricky and is aimed at stronger students] [4 marks d) Determine the value in period 2 dollars of the expenditure stream if Door2 DoorCo decide to go with WiserWheels. [8 marks] e) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with WiserWheels [NB this is a bit tricky and is aimed at stronger students] [4 marks Act f) Comparing your answers for part (b) with part (d), OR part (c) with part (e), explain which tyre supplier Door2DoorCo should choose. [2 marks] Go t QUESTION 2 (38 marks) Door2DoorCo are a large courier company who have just received a shipment of X new vans. They wish to lock in a tyre supply contract to keep these vans well shod over the Y months that they intend to keep the vans. The vans come with low quality tyres that will need to be replaced in 2 months Two suppliers, ThriftyTread and WiserWheels have expressed interest at supplying tyres at a fixed price for the duration. The offers are summarised below: Gamma or Delta Assignment Allocation Number of Vans, X Corporate Discount Rate Initial Tyre Life Keep vans for (Y) ThriftyTread Alpha or Beta 120 100 J 14.03% p.a. J 12.68% p.a = 2 months. 2 months 50 months 38 months $100.00 $100.00 Tyre price Tyre life Tyres replaced at Four months Four months 2, 6, 10,., 46, 50 months 2, 6, 10,, 34, 38 months WiserWheels Tyre price Tyre life Tyres replaced at $148.00 $77.50 Three months Six months 2, 5, 8,, 35, 38 months 2, 8, 14, 44, 50 months For each of the two potential suppliers, illustrate Door2DoorCo's tyre expenditure for the new vans as a fully labelled timeline diagram. (Remember that there are X a) new vans, and assume each van has 4 tyres.) [3+3=6 marks b) Determine the value in period 2 dollars of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [Hint, you will firstly need to find the ja rate equivalent to the corporate discount rate, you will then need to find the PV of the expenditure stream in period 2 dollars] 8 marks c) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with ThriftyTreads. [NB this is a bit tricky and is aimed at stronger students] [4 marks d) Determine the value in period 2 dollars of the expenditure stream if Door2 DoorCo decide to go with WiserWheels. [8 marks] e) Thus determine the present value of the expenditure stream if Door2DoorCo decide to go with WiserWheels [NB this is a bit tricky and is aimed at stronger students] [4 marks Act f) Comparing your answers for part (b) with part (d), OR part (c) with part (e), explain which tyre supplier Door2DoorCo should choose. [2 marks] Go t
