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Your old delivery truck is worn out and you are considering buying a new one. The new one costs $50,000 and would be depreciated on
Your old delivery truck is worn out and you are considering buying a new one. The new one costs $50,000 and would be depreciated on the following accelerated depreciation schedule: Year 1: 40%, Year 2: 30%, and Year 3: 30% The new truck would provide operating income of $12,000 per year for the next three years. After that it will be worthless. Your firm is in the 32% tax bracket The old truck has a book value of $500 can be sold for scrap value (the value of the metal it contains) for $1,500 immediately. a. What is the new truck's payback period? b. Assuming a reinvestment rate of 8%, what is the MIRR? (two decimal places please)
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