Question
Your company if contemplating replacing its current fleet of delivery vehicles with Nissan NV vans. You will be replacing five fully-depreciated vans, which you think
Your company if contemplating replacing its current fleet of delivery vehicles with Nissan NV vans. You will be replacing five fully-depreciated vans, which you think you can sell for $3,000 each and which you could probably use for another two years if you choose not to replace them. The NV vans will cost $29,850 each in the configuration you want them and can be depreciated using MACRS over a five year life. Expected yearly before tax cash savings due to acquiring the new vans amounts to aobut $3,700 each. If your cost of capital is 8 percent and your firm faces a 34 percent tax rate, what will the cash flows for this project be?
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