Amazon is considering adding a fleet of drones to its company. These drones cost $2,000 each. Each drone is expected to generate an annual revenue of $800 and has a useful life of 3 years. After 3 years of operation, i has negligible salvage value. What is the external rate of return for each drone? Assume Amazon's MARR is 12%. Click here to access the TVM Factor Table calculator. %

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...
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Amazon is considering adding a fleet of drones to its company. These drones cost $2,000 each. Each drone is
expected to generate an annual revenue of $800 and has a useful life of 3 years. After 3 years of operation, it
has negligible salvage value. What is the external rate of return for each drone? Assume Amazon's MARR is
12%.
Click here to access the TVM Factor Table calculator.
%
Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The
tolerance is ±0.2.
Should Amazon invest in these drones?
Transcribed Image Text:Amazon is considering adding a fleet of drones to its company. These drones cost $2,000 each. Each drone is expected to generate an annual revenue of $800 and has a useful life of 3 years. After 3 years of operation, it has negligible salvage value. What is the external rate of return for each drone? Assume Amazon's MARR is 12%. Click here to access the TVM Factor Table calculator. % Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2. Should Amazon invest in these drones?
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