Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $47,000. The object is to save on horse transporter

image text in transcribed

Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $47,000. The object is to save on horse transporter rentals. Marsha had been renting a transporter every other week for $212 per day plus $1.60 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives Joe Laminitis, the driver, a $50 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.57 per mile. Insurance costs for Marsha's transporter are $1,800 per year. The transporter will probably be worth $27,000 (in real terms) after eight years, when Marsha's horse Spike will be ready to retire. Assume a nominal discount rate of 9% and a 3% forecasted inflation rate. Marsha's transporter is a personal outlay, not a business or financial investment, so taxes can be ignored. Calculate the NPV of the investment. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) NPV

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Investments

Authors: Zvi Bodie, Alex Kane, Alan Marcus

9th edition

78034698, 978-0077502287, 77502280, 978-0078034695

More Books

Students also viewed these Finance questions

Question

What are the exceptions thrown by RMI?

Answered: 1 week ago

Question

Determine miller indices of plane X z 2/3 90% a/3

Answered: 1 week ago