Financial Engineering

Question 1

Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $50,000 and will generate delivery revenue of $20,000 for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 21%. Assuming that the vehicle is depreciated using MACRS 5-year property class, and that Fink Co. uses an after-tax MARR of 8%, compute the PW, and determine whether Fink Co. should purchase the new business vehicle.

(a) What is the present worth? Make a detailed spreadsheet table of all the components. Indicate all the formulas. Carry all interim calculations to 5 decimal places and then round final answer to a whole number.

(b) Should Fink Co. purchase the new business vehicle? No. Yes. Not enough information.

I need the answer ASAP. The wrong answer will get downvoted. Thanks.