Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $50,000 and
Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $50,000 and generate delivery revenue of $20,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $40,000. The terms of the loan stipulate that 6% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $10,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co.uses an after-tax MARR of 9%, 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. Click here to access the MACRS-GDS percentages page. 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. The tolerance is +10. Should Robinson Co. purchase the new delivery vehicle? e Textbook and Media Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $50,000 and generate delivery revenue of $20,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $40,000. The terms of the loan stipulate that 6% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $10,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co.uses an after-tax MARR of 9%, 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. Click here to access the MACRS-GDS percentages page. 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. The tolerance is +10. Should Robinson Co. purchase the new delivery vehicle? e Textbook and Media
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started