Question
PLEASE PROVIDE SOLUTION TO ONE OF THE ANSWERS (A-E) BELOW Lemington Enterprises is considering a project to replace its fleet of 10 vehicles. The company
PLEASE PROVIDE SOLUTION TO ONE OF THE ANSWERS (A-E) BELOW
Lemington Enterprises is considering a project to replace its fleet of 10 vehicles. The company makes its fleet replacement decision every five years. Its current fleet of 10 vehicles was purchased five years ago at $50,000 each, and can be sold for $8,000 each today. The new vehicles will cost $60,000 each and will bring cost savings of $100,000 per year. In five years, the new vehicles can be sold for $9,000 each. If the fleet is not replaced today, the current fleet will have no salvage value in five years time. The CCA rate on these vehicles is 30%, and the companys marginal tax rate is 35%. What is the PV(CCATS) for this replacement project, assuming a required rate of return of 10%? Round your answer to the nearest dollar.
Select one:
a. $115,626
b. $135,672
c. $130,295
d. $13,567
e. $148,711
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