A local delivery company has purchased a delivery truck for $15,000 The truck will be depreciated under MACRS as five year property The truck 's market value ( salvage value ) is expected to decrease by $2,500 per year It is expected that the purchase of the truck will increase its revenue by $10,0...

A local delivery company Income Statement 0 1 2 Revenues 10000 10000 Expenses OM 3000 30 ...

A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under

Question:

A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under MACRS as five-year property. The truck's market value () is expected to decrease by $2,500 per year. It is expected that the purchase of the truck will increase its revenue by $10,000 annually. The O&M costs are expected to be $3,000 per year. The firm is in the 40% tax bracket, and its is 15%. If the company plans to keep the truck for only two years, what would be the equivalent present worth?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...