TVOM Inc. is a transportation company. They are considering the purchase of a delivery truck and have three to choose between. Each truck is estimated to have a salvage value at the end of life of 10% of its original value. They plan to operate the business forever.

The Company's MARR is 30%. Their provincial tax rate is 6%, and the federal tax is 10%. As they are in Canada, each tax rate is applied to the Taxable income (i.e., same value used for both). They use straight line depreciation for the assets.

Assume there is no inflation, and that TVOM can repeat the purchase and sale of any truck at the same cost and salvage value at any time.

Hint - if you set up your spreadsheet properly, part 2 of this question is easily solved.

1. Utilizing an Annual Worth analysis method, which Truck should they purchase and why? Ensure you draw the cashflow diagram !!

2. If TVOM'S MARR was changed, at what new MARR would their Truck purchase decision change in Part a), and which Truck would they then prefer? Hint, copy the calculations above, and paste it to a new sheet so you dont need to repeat a lot of work... and use Goal Seek.