2. The Euro Transport company wants to purchase a new truck. The truck would cost OMR225,000...

 

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2. The Euro Transport company wants to purchase a new truck. The truck would cost OMR225,000 and its salvage value would be 10% at the end of its 20-year useful life. The annual estimated revenues and costs associated with the new truck are given L below: (4 Marks) Revenues OMR125,000 Less operating expenses: Maintenance OMR20,000 Driver's salary OMR45,000 Depreciation OMR10,125 Insurance OMR15,000 Total operating expenses OMR90,125 ———- Net operating income OMR34,875 Required: 1. Compute payback period of the truck. Is the investment in new truck desirable if maximum desired payback period of the Euro Transport company is 5 years? 2. Compute the accounting rate of return promised by the truck. Would the Euro Transport company be interested in new truck if minimum required accounting rate of return is 12%? 3. List down the various governmental projects which are running now a day in the Sultanate of Oman along with their scope, budget and time duration. (2 Marks) 2. The Euro Transport company wants to purchase a new truck. The truck would cost OMR225,000 and its salvage value would be 10% at the end of its 20-year useful life. The annual estimated revenues and costs associated with the new truck are given L below: (4 Marks) Revenues OMR125,000 Less operating expenses: Maintenance OMR20,000 Driver's salary OMR45,000 Depreciation OMR10,125 Insurance OMR15,000 Total operating expenses OMR90,125 ———- Net operating income OMR34,875 Required: 1. Compute payback period of the truck. Is the investment in new truck desirable if maximum desired payback period of the Euro Transport company is 5 years? 2. Compute the accounting rate of return promised by the truck. Would the Euro Transport company be interested in new truck if minimum required accounting rate of return is 12%? 3. List down the various governmental projects which are running now a day in the Sultanate of Oman along with their scope, budget and time duration. (2 Marks)

Answer rating: 100% (QA)

1 Payback period Investment Period Annual Cashflow OMR225000 OMR34875 OMR10125 OMR 2250... View the full answer