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2. The Euro Transport company wants to purchase a new truck. The truck would cost OMR225,000 and its salvage value would be 10% at the
2. The Euro Transport company wants to purchase a new truck. The truck would cost OMR225,000 and its salvage value would be 10% at the end of its 20-year useful life. The annual estimated revenues and costs associated with the new truck are given L below: ( 4 Marks) OMR125,000 Revenues Less operating expenses: Maintenance Driver's salary Depreciation Insurance OMR20,000 OMR45,000 OMR10,125 OMR15,000 Total operating expenses OMR90,125 Net operating income OMR34,875 Required: 1. Compute payback period of the truck. Is the investment in new truck desirable if maximum desired payback period of the Euro Transport company is 5 years? 2. Compute the accounting rate of return promised by the truck. Would the Euro Transport company be interested in new truck if minimum required accounting rate of return is 12%? 3. List down the various governmental projects which are running now a day in the Sultanate of Oman along with their scope, budget and time duration. (2 Marks)
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