Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show formulas, do not use excel thanks Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with

image text in transcribed

please show formulas, do not use excel

thanks

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $76,000 and will generate delivery revenue of $26,000 in year 1; they anticipate this revenue will increase by 6% in each of the following five years (years 2-6) due to inflation. If Robinson Co. purchases the vehicle, it will take a loan for $66,000 that charges 5% annual interest and repay the loan in 6 equal end of year payments. At the end of the 6 years, the vehicle will be sold for $5,000 (in then-current dollars). The tax rate is 25%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle

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

Free Dollar For College For Dummies

Authors: David Rosen, Caryn Mladen

1st Edition

0764554670, 978-0764554674

More Books

Students also viewed these Finance questions