The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided below. Parameters Apex Tops Perfect 1. Initial Cost ($) $500,000 550,000 585,000 $350,000 at EOY1 $360,000 at $400,000 2. Revenues ($) decreasing by 1% EOY1 increasing annually by 2% annually annually thereafter thereafter $275,000 at $232,000 at $210,000 at EOY1 EOY1 increasing EOY1 3. Operating increasing by by $4,000 Costs $5,000 annually decreasing by annually 1.5% annually ($) thereafter. thereafter thereafter 4. End-of-life salvage value $120,000 95,000 -30,000 ($) 5. Useful life 5 years 5 years (years) All parameter values are fictitious. EOY = End-of-year Industry Standard = 4 years MARR = 10% 10 years . . 28. If the company's current motel purchasing budget is $1.2 million which motel(s) should it purchase assuming that motels are independent investments? 29. If the company prefers to purchase two motels instead of one in 2020 (that is, one in September and the other in November), which motel in Question 28 should be purchased in September? 30. Jing plans to make eight (8) consecutive monthly deposits of $500 in calendar year 2020 beginning on March 1 to a savings account that pays 12% interest compounded monthly. Which of the following answers would give Jing's equivalent 12-month deposit (AEW) in 2020? a) AEW=500(FIA, 12%/12,8)(F/P,12%/12,4)(A/P,12%/12, 12) b) AEW=500(P/A,12%/12,8)(P/F,12%/12,1)(A/P,12%/12,12) c) AEW=500(6)(F/P,12%/12,8)(A/P,12%/12,12) d) AEW=[500+500(PIA, 12%/12,5)](A/P,12%/12,12) The Best Value Motel Company is analyzing the addition of another motel to its chain. The key parameters of three motels under scrutiny are provided below. Parameters Apex Tops Perfect 1. Initial Cost ($) $500,000 550,000 585,000 $350,000 at EOY1 $360,000 at $400,000 2. Revenues ($) decreasing by 1% EOY1 increasing annually by 2% annually annually thereafter thereafter $275,000 at $232,000 at $210,000 at EOY1 EOY1 increasing EOY1 3. Operating increasing by by $4,000 Costs $5,000 annually decreasing by annually 1.5% annually ($) thereafter. thereafter thereafter 4. End-of-life salvage value $120,000 95,000 -30,000 ($) 5. Useful life 5 years 5 years (years) All parameter values are fictitious. EOY = End-of-year Industry Standard = 4 years MARR = 10% 10 years . . 28. If the company's current motel purchasing budget is $1.2 million which motel(s) should it purchase assuming that motels are independent investments? 29. If the company prefers to purchase two motels instead of one in 2020 (that is, one in September and the other in November), which motel in Question 28 should be purchased in September? 30. Jing plans to make eight (8) consecutive monthly deposits of $500 in calendar year 2020 beginning on March 1 to a savings account that pays 12% interest compounded monthly. Which of the following answers would give Jing's equivalent 12-month deposit (AEW) in 2020? a) AEW=500(FIA, 12%/12,8)(F/P,12%/12,4)(A/P,12%/12, 12) b) AEW=500(P/A,12%/12,8)(P/F,12%/12,1)(A/P,12%/12,12) c) AEW=500(6)(F/P,12%/12,8)(A/P,12%/12,12) d) AEW=[500+500(PIA, 12%/12,5)](A/P,12%/12,12)
