Answered step by step
Verified Expert Solution
Question
1 Approved Answer
15 Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $51,000. The object is to save on horse transporter
15 Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $51,000. The object is to save on horse transporter rentals. 0.66 points Marsha had been renting a transporter every other week for $216 per day plus $1.80 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives Joe Laminitis, the driver, a $45 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.61 per mile. Insurance costs for Marsha's transporter are $2,000 per year. The transporter will probably be worth $31,000 (in real terms) after eight years, when Marsha's horse Spike will be ready to retire. Assume a nominal discount rate of 9% and a 4% forecasted inflation rate. Marsha's transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Calculate the NPV of the investment. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) X Answer is complete but not entirely correct. NPV $ 7,571 x
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started