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You have the opportunity to attend a Leafs game either at home in Toronto against the Buf

You have the opportunity to attend a Leafs game either at home in Toronto against the Buf

You have the opportunity to attend a Leafs game either at home in Toronto against the

Buffalo Sabres or in Buffalo. You can travel to the Toronto game using your weekly TTC bus pass which cost $36.00 when purchased to travel to school each week. If you attend the game in Buffalo your share of the cost of travelling with a group of friends by car will be $23.00. The cost of a ticket in Buffalo is $45.00. In Toronto you will have to acquire the ticket from a scalper at the cost of $85.00. The cost of hot dogs and beer at the Toronto game will be $60.00. The same food and beverages in Buffalo will cost $38.00. You must decide which game to attend.

Required:

A. Which if any of the listed costs above are not relevant to your decision?

B. What are the total relevant costs of attending the game in Toronto?

C. What are the total relevant costs of attending the game in Buffalo?

D. What is the differential cost involved in your decision?

18) You are planning to buy a new car. Based on your market research you have narrowed the decision to a choice between a Honda Civic and a Toyota Corolla. Since you are indifferent between the two vehicles you decide to base you decision on relevant cost only. You will be trading in your current vehicle which you purchased used a year ago. You expect to keep the new vehicle for five years. You have gathered the following data for use in your decision:

VEHICLE

HONDA CIVIC

TOYOTA COROLLA

Purchase Price

$14,990

$15,450

Insurance (5 years)

$21,670

$19,680

Annual operating costs

$3,800

$3,800

Purchase price of current vehicle

$8,000

$8,000

Trade-in allowance for currrent vehicle

$5,600

$6,300

Sales tax

$1,220

$1,190

Expected sales value of new vehicle at end of five years

$8,300

$7,100

 

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 Civic?

C. What are the total relevant costs of purchasing the Corolla?

D. What is the differential cost involved in your decision?

Tripti 07-Dec-2019

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