Question
A transport company is planning to invest in a new truck. The investment cost of the truck is $100,000 and the useful life is
A transport company is planning to invest in a new truck. The investment cost of the truck is $100,000 and the useful life is 10 years. Salvage value of the truck is $5,000. Maintenance costs for the first five years are included in the investment cost. For the last five years, maintenance cost is $1,500 per year. At the end of the first year, $1,000 tax is paid, and payment decreases $100 each year. If the company's minimum attractive rate of return is 25%, how much should be earned annually to be economically justified investment? Draw cash flow diagrams.
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Financial Management for Public Health and Not for Profit Organizations
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