A manager wants to replace a company car, which generates annual operating and maintenance expenses of $90,000. the car that currently has it could be maintained for 3 more years in the business, and at the At the end of that period, its surrender value would be estimated at $0. In case of buying a new car, the real car could be sold in these times at $25,000. The price of new car is $130,000, its value of ransom is estimated at $30,000 after of 3 years of use and its costs of operation and maintenance would be $50,000 annually. 

If the manager expects a return on his investment of 10% annual cash, what is the best alternative for you? Solve by the Net Present Value method.

Answer rating: 100% (QA)

To determine the best alternative we need to calculate the Net Present Value NPV of both options and ... View the full answer