Problem $4\mathrm{.}6(16$ points$)$

Amazon is on a mission to be net zero carbon by $2040.$ As part of that endeavor, they are considering using autonomous delivery vehicles which operate on alternative power sources $($solar$,$ battery, recycled oil, etc$).$ The autonomous vehicles are expected to cost $$100,000$ each. Amazon wants to invest in $30$ to start. Amazon will pay for $30\%$ of the total cost of the autonomous vehicles outnight and borrow the other $70\%.$ The loan is borrowed at $11\%$ for $5$ years. Each vehicle is estimated to have a salvage value of $$30,000$ after $ years. The autonomous delivery vehicles are expected to be able to deliver $\frac{24}{7}$ and therefore are expected to increase revenue by $$50,000$per unit per year and add operating expenses of $$10,000$ per unit per year. Assume an effectrve corporate tax rate of $32\%.$

a$)$ Develop an ATCF table for the $8$ years of the AV's considering all $30$ AVs $.(8$ points$)$

a$.$ Use MACRS depreciation with the appropriate property class. You use an AI tool $($e$.$g$.$ Ooogle Gemini, Navigator, Chat GPT$)$ to find the appropriate life class

b$.$ When you depreciate the asset, you depreciate for the initial cout of the asset $($not what you paid for it$).$

c$.$ The entire loan payment each year as NOT tax deductible, only the amount paid on for interest is$.$ So$,$ any payment toward the principal of the loan is not considered tax dedoctible. There are $2$ new formulas in Excel you will need to explore $($IPMT and PPMT$)$

d$.$ Negative taxable income is treated a $50$ taxes paid

e$.$ The ATCF must consider all cash payments $($incloding the full loan payment$)$

b$)$ Calculate the IRR of the ATCF. $(2$ points$)$

c$)$ If the MARR is $9\%,$ is this a good investment" $(2$ points$)$

d$)$ If Amazon sells $15$ of the AV's in year $8$ for $$35,000$ what is:

a$.$ The amount of capital gains tax owed? Capital Gains tax $=35\%(1$ point$)$

b$.$ The amount of depreciation recovery tax owed? Depreciation Recovery Tax $=12\%(2$ points$)$

c$.$ The amount of capital loss they can claim as depreciation? Capital Loss Tax Cut $=9\%(1$ point$)$