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Author Question: White Water Tours is considering the purchase of a new tour boat. They are faced with choosing ... (Read 26 times)

Beheh

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White Water Tours is considering the purchase of a new tour boat. They are faced with choosing between the Wave Runner and the Split Hull models. The boats are comparable on performance and both meet the company's needs equally. Both boats have an expected useful life of five years at which time they will be sold. The following information has been gathered to assist in making the purchase decision:

WAVE RUNNERSPLIT HULL
Purchase price$110,350$121,900
Fuel cost over useful life29,68028,430
Insurance cost over useful life60,00060,000
Estimated repairs and maintenance15,49017,380
Revenue generated over useful life575,000575,000
Estimate selling price at end of useful life22,75018,500

Required:
A. Which if any of the listed costs above are not relevant to your decision?
B. What are the total relevant costs of purchasing the Wave Runner?
C. What are the total relevant costs of purchasing the Split Hulla?
D. What is the differential cost involved in your decision?


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Marked as best answer by Beheh on Jan 4, 2020

paavo

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Beheh

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Reply 2 on: Jan 4, 2020
Gracias!


AISCAMPING

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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