Question: Current Attempt in Progress Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $45,000 and will generate constant-dollar delivery revenue of
Current Attempt in Progress Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $45,000 and will generate constant-dollar delivery revenue of $16,000 (year 0 dollars) for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $6,000. The tax rate is 21%, and annual inflation is 5%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Fink Co. uses an after-tax real interest MARR of 8%, compute the PW, and determine whether Fink Co. should purchase the new business vehicle.
please remember the inflation percent and include it in the calculations.
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