Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $131,250 and generate delivery revenue of $35,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $105,000. The terms of the loan stipulate that 4% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. 2$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +10. Should Robinson Co. purchase the new delivery vehicle?

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $131,250 and generate delivery revenue of $35,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $105,000. The terms of the loan stipulate that 4% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. 2$ Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is +10. Should Robinson Co. purchase the new delivery vehicle?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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