Question
Your good friend Lynda lives in Vancouver and recently saw an advertisement for Lyft. She has approached you to get your opinion as she knows
Your good friend Lynda lives in Vancouver and recently saw an advertisement for Lyft. She has approached you to get your opinion as she knows you are an aspiring accounting student at TRU. Lynda does not currently own a vehicle and is considering purchasing a new all electric vehicle as she has heard they require less maintenance and she has always wanted to purchase one. She recently looked through the BC Hydro website https://electricvehicles.bchydro.com/buying/EV-models-in-BC and found that there were 5 new SUV models available that are eligible for government rebates. Also, her condo building is equipped with a charging station that is currently underutilized so she would not have to purchase one. Lynda really liked the fully equipped Ford Mustang Mach-E equipped with All Wheel Drive and Technology package which would cost $70,300 including all taxes. This amount would be reduced by a $3,000 government rebate and as you suggested the $3,057 of GST paid on the acquisition. You also note from your tax class that CCA (class 16 - 40%) would apply. Lynda is hopeful that a salvage value of $20,000 can be realized at the end of the fifth year. She thinks that she can earn part time weekly revenues of $925 offset by average operating costs of $3,000 per month for charging, correct ICBC insurance and maintenance expenses. Lynda estimates her average marginal tax rate of 30% and currently earns 12% per year on her other investments. Required submit your response via the assignment moodle dropbox to the following: 1) Compute the net present value of this investment. Show and explain all details of your calculations in a way that Lynda can see each step. (10 marks) 2) Discuss any additional advice you would give Lynda including quantitative and/or qualitative issues of your analysis. (5 marks)
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