Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost...
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Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $44,000. The object is to save on horse transporter rentals. Marsh had been renting a transporter every other week for $209 per day plus $1.45 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives her driver, Joe Laminitis, a $30 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.54 per mile. Insurance costs for Marshas transporter are $1650 per year. The transporter will probably be worth $24,000 (in real terms) after eight years, when Marshas horse Spike, will be ready to retire. Assume a nominal discount rate of 10% and a 3% forecasted inflation rate. Marshas transporter is a personal outlay, and not a business or financial investment, so taxes can be ignored. CALCULATE THE NPV OF THE INVESTMENT. DO NOT ROUND INTERMEDIATE CALCULATIONS
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