Question 3 Carlos owns and operates a restaurant. To help expand his business, Carlos is considering the feasibility of offering a wedding catering service. To open this service, Carlos needs a van to deliver his food to the various weddings. After doing some research and price-checking, he has found two vans that will suit his needs. A new van will cost $50,000 and will last 8 years. A used van will cost $30,000 and will last 5 years. After determining the NPV of both vans, the new van has a NPV of $40,332.45 and the used van has a NPV of $20,012.42. Carlos has a 12% required rate of return, a 1% risk premium, a 30% marginal tax rate and an inflation rate of 1%. What is the Real Discount Rate? a.10.02\% b.7.65\% c. 8.02% d.6.93\% What is the annuity equivalent for the new van? a.($6,258.56)b.($7,023.72)c.($10,301.46)d.($8,707.28) What is the annuity equivalent for the used van? a.($6,286,26)b.($5,014.86)c.($7,517.62)d.($9,925.24) If Carlos makes his decision based on the Annuity Equivalents, which van should he buy? a.Used Van b.New Van c.Indifferent between the two Question 3 Carlos owns and operates a restaurant. To help expand his business, Carlos is considering the feasibility of offering a wedding catering service. To open this service, Carlos needs a van to deliver his food to the various weddings. After doing some research and price-checking, he has found two vans that will suit his needs. A new van will cost $50,000 and will last 8 years. A used van will cost $30,000 and will last 5 years. After determining the NPV of both vans, the new van has a NPV of $40,332.45 and the used van has a NPV of $20,012.42. Carlos has a 12% required rate of return, a 1% risk premium, a 30% marginal tax rate and an inflation rate of 1%. What is the Real Discount Rate? a.10.02\% b.7.65\% c. 8.02% d.6.93\% What is the annuity equivalent for the new van? a.($6,258.56)b.($7,023.72)c.($10,301.46)d.($8,707.28) What is the annuity equivalent for the used van? a.($6,286,26)b.($5,014.86)c.($7,517.62)d.($9,925.24) If Carlos makes his decision based on the Annuity Equivalents, which van should he buy? a.Used Van b.New Van c.Indifferent between the two