Evaluate and select the best purchase of the following vehicles using straight line depreciation, a tax rate of 25%, and an after-tax MARR of 9% per year: Vehicle A: Cost = $20,000, Salvage Value= $5000, Annual operating cost = $1000, Life = 6 years Vehicle B: Cost = $15,000, Salvage Value = $2000, Annual operating cost = $1200, Life = 6 years %3D %3D %3D %3D **Remember that this is based on Chapter 12, not the Park chapter, so no opportunity cost needs to be considered, this is a straight PW comparison after taxes***

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Evaluate and select the best purchase of the following vehicles using straight line
depreciation, a tax rate of 25%, and an after-tax MARR of 9% per year:
Vehicle A: Cost = $20,000, Salvage Value= $5000, Annual operating cost = $1000,
Life = 6 years
Vehicle B: Cost = $15,000, Salvage Value = $2000, Annual operating cost = $1200,
Life = 6 years
%3D
**Remember that this is based on Chapter 12, not the Park chapter, so no
opportunity cost needs to be considered, this is a straight PVW comparison after
taxes***
Transcribed Image Text:Evaluate and select the best purchase of the following vehicles using straight line depreciation, a tax rate of 25%, and an after-tax MARR of 9% per year: Vehicle A: Cost = $20,000, Salvage Value= $5000, Annual operating cost = $1000, Life = 6 years Vehicle B: Cost = $15,000, Salvage Value = $2000, Annual operating cost = $1200, Life = 6 years %3D **Remember that this is based on Chapter 12, not the Park chapter, so no opportunity cost needs to be considered, this is a straight PVW comparison after taxes***
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