CoursHeroTranscribedText: Robinson Co. is interested in purchasing a new delivery vehicle so it can become...
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CoursHeroTranscribedText: Robinson Co. is interested in purchasing a new delivery vehicle so it can become a subcontractor with Amazon Logistics. The vehicle costs $75,000 and will generate delivery revenue of $30,000 in year 1; they anticipate this revenue will increase by 5% in each of the following ve years (years 2-6) due to ination. If Robinson Co. purchases the vehicle, it will take a loan for $60,000 that charges 4% annual interest and repay the loan in 6 equal end of year payments. At the end of the 6 years, the vehicle will be sold for $10,000 (in thencurrent dollars). The tax rate is 25%. 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
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