Uitwerking_case_MA21_week5 - Bachelor Economie Management...

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Bachelor Economie – Management Accounting jaar 2, periode 1 Uitwerking case 16 – 57 te behandelen tijdens de AWV Case 16-57 (60 minutes) 1. The two main alternatives for the Board of Education are as follows: (a) Use full-size buses on regular routes (b) Use minibuses on regular routes 2. If the board decides to use minibuses, then there are two options for the full-size buses: (a) Sell them (b) Keep them in reserve 3. Net-present-value analysis of options for full-size buses: (a) Sell five full-size buses: Sales proceeds ($15,000 × 5) . .............................................................. $75,000 * *No discounting necessary, since the buses would be sold now (time 0). (b) Annual savings on bus charter fees ($30,000 – $5,000) . ...................... $25,000 Annuity discount factor (Table IV: r = .12, n = 5) . .................................. × 3.605 Present value of savings . ...................................................................... $90,125 The full-size buses should be kept in reserve, since the NPV of that option is greater. 2. Net present-value analysis of minibus purchase decision. In the following incremental cost analysis, parentheses denote cash flows favoring the
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This note was uploaded on 09/13/2008 for the course ACCOUNTING 1054 taught by Professor Brooke during the Spring '08 term at Accreditation Commission for Acupuncture and Oriental Medicine.

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Uitwerking_case_MA21_week5 - Bachelor Economie Management...

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