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

Expert Solution

Please comment for any explanation,

Thanks,


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