Question
In: Accounting
Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs...
Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $31,500 per year. Nancy can buy a used truck for $9,500 that will be adequate for the next 4 years. Operating and maintenance costs are estimated to be $24,000 per year. At the end of 4 years, the used truck will have an estimated salvage value of $4,200. Nancy’s MARR is 22%/year
What is the present worth of this investment? Round Entry to two decimals places.
What is the decision rule for judging the attractiveness of investments based on present worth?
If PW > 0, Accept, Otherwise Reject
If PW < 0, Accept, Otherwise Reject
None of the above
Should Nancy buy the truck?
Yes or NO?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Nancy's Notions pays a delivery firm to distribute its products in the metro area. Delivery costs...
Nancy's Notions pays a delivery firm to distribute its products
in the metro area. Delivery costs are $26,000 per year. Nancy can
buy a used truck for $9,000 that will be adequate for the next 3
years. Operating and maintenance costs are estimated to be $21,000
per year. At the end of 3 years, the used truck will have an
estimated salvage value of $4,000. Nancy's MARR is
34%/year.
a. What is this investment's internal rate of return?
Nancy's Notions pays a delivery firm to distribute its products in the metro area. Delivery costs...
Nancy's Notions pays a delivery firm to distribute its products
in the metro area. Delivery costs are $28,000 per year. Nancy can
buy a used truck for $7,000 that will be adequate for the next 3
years. Operating and maintenance costs are estimated to be $21,000
per year. At the end of 3 years, the used truck will have an
estimated salvage value of $4,000. Nancy's MARR is
19%/year.
a. What is this investment's internal rate of return?
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