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Nancy's Notions pays a delivery firm to distribute its products in the metro area. Delivery...

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Accounting

Nancy's Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $30,000 per year. Nancy can buy a used truck for $10,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,000. Nancy's MARR is 24 percent/year.

a) What is the annual worth of this investment?

b) What is the decision rule for juding the attractiveness of investments based on annual worth?

c) Should Nancy buy the truck?

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