Math  /  Data & Statistics

QuestionQuestion 2 Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle would cost $75,000\$ 75,000 and generate delivery revenue of $30,000\$ 30,000 for each of the next 6 years. If Robinson Co. purchases the vehicle, it will take a loan for $60,000\$ 60,000. The terms of the loan stipulate that 4%4 \% 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\$ 10,000. The tax rate is 40%40 \%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Robinson Co. uses an after-tax MARR of 10\%, compute the PW and determine whether Robinson Co. should purchase the new business vehicle. ( 25 points)

Studdy Solution
The present worth of the investment is approximately $108,575.45\$108{,}575.45.
Since the PW is **positive**, Robinson Co. *should* purchase the vehicle!

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