Question
A company is considering whether to purchase a new mini tractor for moving furniture. There are two types of mini tractors. Tractor Alpha would last
A company is considering whether to purchase a new mini tractor for moving furniture. There are two types of mini tractors.
Tractor Alpha would last for five years and has NPV of 22540.
Tractor Beta would last for seven years and has NPV of 26390.
Assume the discount rate for the company is 10%.
Answer the following questions 14(a) to 14(c). Note: For all the calculation questions, you are only allowed to write the numerical answer you calculated for the question, please DO NOT add $, %, dollars, million, thousand, percent, space, etc. in your answers.
14(a): Whats the equivalent annual value (EAV) of Tractor Alpha? (Round your final answer to the nearest dollar if needed)
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14(b): Whats the EAV of Tractor Beta? (Round your final answer to the nearest dollar if needed)
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Question 17
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14(c): Which type of tractor should the company purchase, why?
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