Naurfold regularly buys new delivery vans. Each van costs 30,000, has running costs of 3,000 and...

 

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Naurfold regularly buys new delivery vans. Each van costs £30,000, has running costs of £3,000 and a scrap value of £10,000 in its 1st year. In its 2nd year the van has higher running costs (£4,000) & a lower scrap value (£7,000). Vehicles are not kept for > 2 years for reliability reasons. Required Using Naurfold's cost of capital of 15%, identify how often the van should be replaced. Ignore tax. Naurfold regularly buys new delivery vans. Each van costs £30,000, has running costs of £3,000 and a scrap value of £10,000 in its 1st year. In its 2nd year the van has higher running costs (£4,000) & a lower scrap value (£7,000). Vehicles are not kept for > 2 years for reliability reasons. Required Using Naurfold's cost of capital of 15%, identify how often the van should be replaced. Ignore tax.

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Naurfold should replace their vans every two years Explana... View the full answer