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An office supply company has purchased a light duty delivery truck for $25,000. It is anticipated that the truck will increase the company's revenue by
An office supply company has purchased a light duty delivery truck for $25,000. It is anticipated that the truck will increase the company's revenue by $10,000 annually, whereas the associated operating expenses are expected to be $3,000 per year. The truck's market value is expected to decrease at the end of the study period, equivalent to 15% of its original purchase cost. If the company plans to keep the truck for only 5 years, determine the IRR and ERR given that MARR ==15%. IRR= % ERR= % Round off up to 2 decimal figures. Based from the IRR, is it a sound investment opportunity? Decision = Based from the ERR, is it a sound investment opportunity? Decision = Options: ACCEPTABLE or REJECTED Suppose that all the given values are the same except that the purchase cost of the truck decreased to $15,000, re-compute the ERR of this problem. ERR=% Round off up to 2 decimal figures. Is it a sound investment opportunity? Decision = Options: ACCEPTABLE or REJECTED
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