This project has to do with a decision support system to assist On The Vine Grapes in making a decision to lease or buy new delivery trucks. Detailed information can be found in CASE 12 on pages 298-299 of your text book.
You are to make a PowerPoint presentation to the class that contains the following:
1. Detailed summary sheet of the lease / buy option for On the Vine Grapes.
2. A recommendation to On The Vine Grapes to buy or lease the new trucks.
**A leading supplier of grapes to do the wine-producing industry in California, On the Vine Grapes, wants to expand its deliver services and expand its reach to market by increasing its current fleet of trucks. Some of the older vehicles were acquired through closed-end leases with required down payments, mliease restrictions, and hefty early termination penalties. Other vehicles were purchased using traditional purchase-to-own loans, which often resulted in high depreciation costs and large maintenance fees. All vehicles were acquried one at a time through local dealers.
On the Vine grapes has asked you to assist in developing a lease/buy cost analysis worksheet in order to make the most cost-effective decisions. Currently the director of operations, Bill Smith, has identified a 2005 Ford F-550 4x2 SD Super Cab 161.8 in WB DRW HD XLT as the truck of choice for the business. This vehicle has retail price of #34,997. or lease price of $600/month through Ford Motor Credit Company.
Here are some basic fees:
1. Lease Costs::
Refundable security deposit : $500
First month's payment at inception : $500
Other initial Costs: $125
Monthly lease payment for remaining term ; $600
Last month payment in advance: No
Allowable annual mileage: 15,000
Estimated annual miles to be driven: 20,000
Per mile charge for excess miles: 0.10
2. Purchase costs
Retail price including sales taxes, title : $34,997
Down payment: $4,000
Loan Interest rate: 8.75%
WIll interest be deductbile business or home equity interest? Yes
Is the gross loaded weight of the vehicle over 6,000lbs? Yes
3. Common Costs and Assumptions
Total lease/loan term : 36months
Discount percent : 8.75%
Tax bracket--Combined federal and state : 33%
Business use percentage : 100%
Some Particulars You Should Know:
1. In the file BUYORLEASE.xls is a template you can use to enter the information. There is also a sheet that has been developed to assist you with the annual deprecation for an automobile.
2. create a detailed summary sheet of the lease/buy opton for On the Vine Grapes.
2. File: BUYORLEASE.xls (Excel file)
*****Note i can provide the the 2 excel spreadsheets which are crucial to making presentation,.
About 5-6 slides should do .
|Due By (Pacific Time)||04/22/2014 12:00 am|
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