Question: please show work Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would

please show work please show work Robinson Co. is interested in purchasing a new delivery

Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $125,000 and generate delivery revenue of $50,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $100,000. The terms of the loan stipulate that 2% annual interest would be charged and that the loan would be repaid in 6 equal end of year payments. At the end of the 6 years, the vehicle will have a salvage value of $5.000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property cla55) and that Robinson Co. uses an after-tax MARR of 12\% compute the PW and determine whether Robinson Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GOS percentages for 27.5-year residential rental property. Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is \pm 10 . Should Robinson Co. purchase the new delivery vehicle

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!