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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 $85,000 and will
Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $85,000 and will generate delivery revenue of $32,000 in year 1: they anticipate this revenue will increase by 4% 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 $60,000 that charges 3% 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 $12,000 (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 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. Use a minus sign to enter your answer, if any. The tolerance is + $10. Should Robinson Co. should purchase the delivery vehicle? No Not enough ingormation to determine Yes
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