Emilia Easy would like to buy a classic car and rent it out for wedding trips and other special occasions.

She plans to buy a $1967$ Mercedes Benz $230$s for EUR $45,000.$ The average increase in value per year for this vehicle is $6\mathrm{.}0\%$ before taxes. For vehicle taxes and insurance, she plans to pay EUR $500$ per year. She estimates that maintenance and repairs will cost EUR $800$ per year. For renting out the Mercedes, she plans EUR $3,000$ cash inflow at the end of the first year, with annual increases of EUR $500.$ For fuel, she expects to pay EUR $1,000$ at the end of the first year, with annual increases of EUR $200.$ She also plans to sell the Mercedes after five years and then stop all her business operations.

The business idea is to be financed entirely with equity capital. In addition, Emilia is prepared to invest further equity capital in the business idea in an unlimited amount if required. She expects a return on her invested equity of $8\mathrm{.}0\%$ before tax each year. If she has money left over in a year, she can invest it at $1\mathrm{.}0\%$ p$.$a$.$ before taxes.

In addition, tax effects must be taken into account in the investment decision. The following data are

available for this:

$-$ The marginal tax rate for Emilia is $20\mathrm{.}0\%.$

$-$ Emilia also pays tax on her interest income at $20\mathrm{.}0\%.$

$-$ The Mercedes is subject to tax depreciation of EUR $8,000$ per year.

To simplify matters, please assume that tax payments become effective at the end of each year. Tax

refunds are taken into account as payments at the end of each year.

a$)$ Set up the payment series of the business idea and first assess with the Net Present Value and the

Net Future Value without taking tax effects into account whether Emilia should carry out the

investment. Justify your decision.

b$)$ Please now assess the investment using the investment calculation with integrated financing plan,

taking into account the tax effects mentioned. What do you recommend?