• Cost of car is $85,000
• Estimated residual value over 3 years is $40,000
• Annual interest rate 3.5%
• Down payment is $0
• Car is 100% business use;
• January 1 decision date;

• 6% discount rate to compute the present value of future cash flows;
• If Donald purchases the auto
• Use the 2019 depreciation limits for passenger autos in Rev Proc 2019-26; year 1: $18,100, year 2: 16,100, year 3: $9,700
• He will sell it at the end of 3 years for the estimated residual value quoted above;
• need to compute a loan amortization table for the interest deduction;
• Since we havent covered this yet, the sale of a business vehicle generates ordinary income/loss.

what is the net present value