*SHOW WORK PLS A. Your boss asks you to evaluate the purchase of a new...
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*SHOW WORK PLS
A. Your boss asks you to evaluate the purchase of a new battery-operated toaster for his restaurant chain. The toaster [ BT ] costs $9 per unit, and has an estimated useful life of five years. The toaster requires batteries once a week yielding an annual operating cost of $140 per year; salvage value of both toaster and batteries is zero. The alternative is to purchase an electric toaster [ ET ] that will last ten years and costs $50. The estimated annual electric bill for this toaster is $130, and it has an expected salvage value of $20. If the company anticipates purchase of 4000 toasters for eternity, which model should you recommend? (Assume a tax rate of 30% and a WACC of 12%.
A. BT: AEC $97.55
B. ET: AEC $97.55
C. none of them
D. ET: AEC $99.96
E. BT: AEC $99.96
B. If toaster BT's annual battery costs decrease by $6 and ET's annual electric costs increase by $6 which toaster
would you recommend now?
A. BT: AEC $95.23
B. ET: AEC $95.76
C. ET: AEC $95.23
D. BT: AEC $95.76
E. none of them
C. If toaster BT's annual battery costs increase by $6 and ET's toaster cost increase by $6 which toaster would you
recommend now?
A. BT: AEC $98.43
B. none of them
C. BT: AEC $104.23
D. ET: AEC $98.43
E. ET: AEC $104.23
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