Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(THis one is Mrs. Katelin Daniels has bought a used horse transporter for her Kentucky estate. It costs 30000 USD. The project is to save

(THis one is

Mrs. Katelin Daniels has bought a used horse transporter for her Kentucky estate. It costs 30000 USD. The project is to save on transporter rentals. Mrs. Daniels had been renting a transporter every other week for 220USD per day plus 1,1USD per mile. Most of the trips are 80 or 100 miles in total. Mrs. Daniels usually gives the driver a 35USD tip. With the new transporter, Mrs. Daniels will only have to pay for diesel fuel and maintenance, at about 0,40USD per mile. Insurance costs for Mrs. Daniels transporter amount to 1200USD per year. The transporter will probably be worth 10000USD (in inflation-adjusted terms) after eight years when Martas horse will be ready to retire. Is the transporter a positive-NPV investment? Assume a nominal discount rate of 9% and a 2,5% forecasted inflation rate. Martas transporter is a personal investment, not a business or financial outlay, so taxes can be ignored.

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_2

Step: 3

blur-text-image_3

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

Budgets And Financial Management In Higher Education

Authors: Margaret J. Barr, George S. McClellan

3rd Edition

1119287731, 9781119287735

More Books

Students also viewed these Finance questions

Question

Describe how the bond issue price is calculated.

Answered: 1 week ago

Question

What is a fund supermarket?

Answered: 1 week ago

Question

5. Explain how to install a performance management program.

Answered: 1 week ago