Question
The owner of a restaurant wishes to select the best alternative between; Buy a van to transport items from the market place to the restaurant,
The owner of a restaurant wishes to select the best alternative between; Buy a van to transport items from the market place to the restaurant, or pay for a daily utility car. If you buy the truck, it has an initial cost of $16'000, which will be paid with an initial installment of 25% and the rest in four equal installments in months 6,18,26 and 44, without financing. $85.00 monthly maintenance costs and $450 bi-annual repairs. He will use the truck for 5 years and will sell it at the end of that time for $8,500. On the other hand, you can use public service vehicles making a daily trip to the square (30 days a month) and paying $4.50 for each trip. Select the best alternative for an opportunity rate of 28% nominal quarterly. Determine, at the end of five years, how much the restaurant owner will have saved by choosing the cheapest system.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started