Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $175,000 and generate delivery revenue of $35,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $140,000. The terms of the loan stipulate that 3% 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 $10,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 9%, 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-GDS 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 10. Should Robinson Co. purchase the new delivery vehicle? Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $175,000 and generate delivery revenue of $35,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $140,000. The terms of the loan stipulate that 3% 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 $10,000. The tax rate is 40%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 9%, 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-GDS 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 10. Should Robinson Co. purchase the new delivery vehicle?
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Imagine you discover a yeast mutant that exhibits a general inability to grow and thrive compared to wild-type yeast. You predict that the mutant has a defect in a basic process necessary for...
-
Black Rose Company has always done some planning for the future, but the company has never prepared a formal budget. Now that the company is growing larger, it is considering preparing a budget....
-
What is the difference between raw data, unstructured data, and structured data?
-
Adelphi Video Store maintains the following policies with regard to purchases of new videotapes at each of its branch stores: 1. Employees are required to take vacations, and the duties of employees...
-
The Smith Pie Company is considering two mutually exclusive investments that would increase its capacity to make strawberry tarts. The firm uses a 12 percent cost of capital to evaluate potential...
-
James has just turned 35 years old, and he has decided it is time to plan seriously for his retirement. On each birthday, beginning in one year and ending when he turns 65, he will save $10,000 in an...
-
The Automatic Teller Machine (ATM) that enables the end-users to perform several of transactions such as check balances, deposit funds, withdraw cash, and transfer funds. The customer needs to check...
-
How is the rise of the gig economy reshaping traditional organizational structures, and what are the implications for workforce management and employee engagement ?
-
As sugggested by its name, the efficiency of the fl bS 1 ow function in Exercise 18.17 is suspect. (a) Try mm1ing fi bSl ow( 25) and then fi bSl ow( 50) on your system and see how long these...
-
Fixed costs remain constant at$450,000 per month. Duringhigh-output months variable costs are$300,000, and duringlow-output months variable costs are$125,000. What are the respective high and...
-
In a two (2) page double-spaced paper, compare the final solution (EcoGuide) with the initial response (i.e., "the car is fine...the way you are driving it is the problem"). What exhibits greater...
-
"What Do Operations Managers Do?". Describe what operations managers do. Next, share with your instructor which two activities personally interest you the most as a manager (or potential manager) and...
-
Jack's Cola Corporation had sales of $1 million during the year, operating expenses of $750,000, and investment in property, plant, and equipment of $2 million. What is Jack's return on investment?...
-
Funds are separate fiscal and accounting entities, each with its own self-balancing set of accounts. The newly established Society for Ethical Teachings maintains two funds-a general fund for...
-
Andrea Lima is attempting to sell her business to Alfonso Moreno. The company has assets of $1,800,000, liabilities of $1,600,000, and stockholders equity of $200,000. Both parties agree that the...
-
When faced with lawsuits, many companies recognize a loss and therefore credit a liability or reserve account for any future losses that may result. For instance, in the famous WorldCom case,...
-
Rothberg Corporations management took the following actions, which went into effect on January 2, 20x7. Each action involved an application of the time value of money. a. Established a new retirement...
Study smarter with the SolutionInn App