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Robinson Co . is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $ 9

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $92,000 and will generate delivery revenue of $30,000 in year 1 ; they anticipate this revenue will increase by 5% 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 $70,000 that charges 4% 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 $6,000(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 11%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle.
Click here to access the TVM Factor Table calculator.
Click here to access the MACRS-GDS Property Classes.
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Click here to access the MACRS-GDS percentages for 27.5-year residential rental property.
$
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. Use a minus sign to enter your answer, if any. The tolerance is +-$10.
Should Robinson Co. should purchase the delivery vehicle?
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