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This was the questions give by the Professor. Not sure what is wrong with the data on AEC. Your boss asks you to evaluate the

image text in transcribedThis was the questions give by the Professor. Not sure what is wrong with the data on AEC.

Your boss asks you to evaluate the purchase of a new battery-operated toaster for his restaurant chain. The toaster [ BT ] costs $80 per unit, and has an estimated useful life of six years. The toaster requires batteries once a week yielding an annual operating cost of $120 per year; salvage value of both toaster and batteries is $9. The alternative is to purchase an electric toaster [ET ] that will last seven years and costs $160. The estimated annual electric bill for this toaster is $100, and it has an expected salvage value of $11. If the company anticipates purchase of 10000 toasters for eternity, which model should you recommend? (Assume a tax rate of 35% and a WACC of 9% 11 A BT: AEC $90.39 B BT: AEC $88.01 C ET: AEC $90.39 D ET: AEC $88.01 E none of them If toaster BT's annual battery costs increase by $3 and ET's annual electric costs decrease by $3 which toaster would vou recommend now? 12 A none of them B BT: AEC $86.06 C BT: AEC $92.33 D ET: AEC $92.33 E ET: AEC $86.06 If toaster BT's annual battery costs decrease by $7 and ET's toaster cost decrease by $7 which toaster would you recommend now? 13 A ET: AEC $85.83 B BT: AEC $85.8:3 none of them D ET: AEC $86.97 E BT: AEC $86.97 Your boss asks you to evaluate the purchase of a new battery-operated toaster for his restaurant chain. The toaster [ BT ] costs $80 per unit, and has an estimated useful life of six years. The toaster requires batteries once a week yielding an annual operating cost of $120 per year; salvage value of both toaster and batteries is $9. The alternative is to purchase an electric toaster [ET ] that will last seven years and costs $160. The estimated annual electric bill for this toaster is $100, and it has an expected salvage value of $11. If the company anticipates purchase of 10000 toasters for eternity, which model should you recommend? (Assume a tax rate of 35% and a WACC of 9% 11 A BT: AEC $90.39 B BT: AEC $88.01 C ET: AEC $90.39 D ET: AEC $88.01 E none of them If toaster BT's annual battery costs increase by $3 and ET's annual electric costs decrease by $3 which toaster would vou recommend now? 12 A none of them B BT: AEC $86.06 C BT: AEC $92.33 D ET: AEC $92.33 E ET: AEC $86.06 If toaster BT's annual battery costs decrease by $7 and ET's toaster cost decrease by $7 which toaster would you recommend now? 13 A ET: AEC $85.83 B BT: AEC $85.8:3 none of them D ET: AEC $86.97 E BT: AEC $86.97

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