A nonprofit organization has received a donation of $100,000 to be used to purchase a new van
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Question:
A nonprofit organization has received a donation of $100,000 to be used to purchase a new van for transporting clients to and from medical appointments. The organization has received two quotes for the purchase of the van:
- Quote A: $90,000 for a new van with a warranty for 3 years or 100,000 miles.
- Quote B: $85,000 for a used van with a mileage of 50,000 miles and no warranty.
The organization estimates that the van will be used for 5 years and will travel an average of 20,000 miles per year. The annual maintenance costs for the van are estimated to be $5,000 for a new van and $8,000 for a used van.
Which van should the organization purchase, and what is the total cost of ownership over 5 years?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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