Compute the PW and determine whether the business should purchase the new business vehicle

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $250,000 and generate delivery revenue of $50,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $200,000. The terms of the loan stipulate that 2% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co.uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property, $ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +10. Should Robinson Co. purchase the new delivery vehicle? TABLE 8.3 MACRS-GDS percentages for 3-,5-, 7-, and 10-year property are 200% DBSLH and 15- and 20-year property are 150% DBSLH 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year Property Property Property Property Property Property 33.33 20.00 14.29 10.00 5.00 3.750 44.45 32.00 24.49 18.00 9.50 7.219 EOY 1 2 14.81 19.20 17.49 14.40 3 4 8.55 6.677 7.41 11.52 12.49 11.52 7.70 6.177 5 11.52 8.93 9.22 6.93 5.713 6 5.76 8.92 7.37 6.23 5.285 7 8.93 6.55 5.90 4.888 00 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 TABLE 8.2 MACRS-GDS Property Classes Property Class 3-Year Property 5-Year Property Personal Property Qualifying property with a class life of 4 years or less, including: tractor units for over-the-road use; special tools for manufacturing motor vehicles; special handling devices for manufacture of food and beverages; and special tools for manufacturing rubber, finished plastic, glass, and fabri- cated metal products Qualifying property with a class life of more than 4 years but less than 10 years, including automobiles and light, general-purpose trucks; certain research and experimentation equip- ment; alternative energy and biomass property, computers and peripheral equipment; satellite space segment property: data-handling equipment (typewriters, calculators, copiers, printers, facsimile machines, etc.); heavy, general-purpose trucks; timber cutting assets; offshore oil and gas well drilling assets; certain construction assets; computer-based telephone central office switching equipment, and many assets used for the manufacture of knitted goods, carpets, apparel, medical and dental supplies, chemicals, and electronic components Qualifying property with a class life of 10 or more years but less than 16 years, property without any class life and not included in the 27.5 and 39-year categories, including office furniture, fixtures, and equipment; theme and amusement park assets; assets used in the exploration for and production of petroleum and natural gas deposits most assets used for manufacturing such things as food products, spun yarn, wood products and furniture, pulp and paper, rubber prod- ucts, finished plastic products, leather products, glass products, foundry products, fabricated metal products, motor vehicles, aerospace products, athletic goods, and jewelry Qualifying property with a class life of 16 or more years but less than 20 years, including vessels, tups, and similar water transportation equipment; petroleum refining assets; assets used in the manufacture of grain, sugar, vegetable oil products, and substitute natural gas-coal gasification Qualifying property with a class life of 20 or more years but less than 25 years, including land improvements, such as sidewalks, roads, drainage facilities, swers, bridges, fencing, and land scaping cement manufacturing some water and pipeline transportation assets, munieipal wastewater treatment plant, telephone distribution plant asset certain electrie and gas utility property, and some liquefied naturales 7-Year Property 10-Year Property 15-Year Property 11 a. MACRS-GDS percentages for 27.5-year residential rental property using mid-month convention Month in Tax Year Property Placed in Service Year 1 2 3 4 5 6 7 8 9 10 12 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% 1.364% 1.061% 0.758% 0.455% 0.152% 2-9 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 10-26 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 3.637% 11-27" 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 1.970% 2.273% 2.258% 2.879% 3.182% 3.485% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 28 29 0.152% 0.455% 0.758% 1.061% 1.364% 1.667% b. MACRS-GDS percentages for 39-year nonresidential real property using mid-month convention Month in Tax Year Property Placed in Service Year 1 2 3 5 6 7 8 9 10 11 12 2.461% 2.247% 2.033% 1.819% 1.605% 1.391% 1.177% 0.963% 0.749% 0.535% 0.321% 0.107% 2-39 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 2.564% 40 0.107% 0.321% 0.535% 0.749% 0.963% 1.177% 1.391% 1.605% 1.8199 2.033% 2.247% 2.4619 Even-numbered year. "Odd-numbered year. 1