Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $116,000 would need to be spent right

image text in transcribed
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $116,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 6 -year economic lives. Once the drones' economic life is over, they would all be sold for $8,700 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: - Amazon expects $9,300 in annual operating costs. - All future cash flows are year-end cash flows. - Amazon pays 21 percent tax rate on all taxable income - Amazon requires an annual discount rate of 10 percent, and the rate is not expected to change in the future. The equivalent annual cost (EAC) of the drones equals outflow, a negative dollar amount should be indicated by a... (Since cost is a cash intermediate calculations and round your answer to minus sign. Do not round aloces, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Business Credit Handbook

Authors: Mr. Reid A. Nunn

1st Edition

1500542725, 978-1500542726

More Books

Students also viewed these Finance questions

Question

Discuss how a psychological skills program might be evaluated.

Answered: 1 week ago