Go Logistics, a small logistics company, is planning to invest in a fleet of delivery vehicles for $760,000; each vehicle is considered MACRS 5-year property. Go Logistics estimates that their fleet of delivery vehicles will generate an additional revenue of $165,000 per year; they plan to operate their fleet for 4 years. After 4 years, the delivery fleet would have a salvage value of $110,000. The tax rate is 26%, the delivery vehicles are eligible for a Section 179 deduction, and Go Logistics uses an after-tax MARR of 9%. Compute the PW and determine whether the business should invest in the delivery vehicles
Go Logistics, a small logistics company, is planning to invest in a fleet of delivery vehicles for $760,000; each vehicle is considered MACRS 5-year property. Go Logistics estimates that their fleet of delivery vehicles will generate an additional revenue of $165,000 per year; they plan to operate their fleet for 4 years. After 4 years, the delivery fleet would have a salvage value of $110,000. The tax rate is 26%, the delivery vehicles are eligible for a Section 179 deduction, and Go Logistics uses an after-tax MARR of 9%. Compute the PW and determine whether the business should invest in the delivery vehicles
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Go Logistics, a small logistics company, is planning to invest in a fleet of delivery vehicles for $760,000; each vehicle is considered MACRS 5-year property. Go Logistics estimates that their fleet of delivery vehicles will generate an additional revenue of $165,000 per year; they plan to operate their fleet for 4 years. After 4 years, the delivery fleet would have a salvage value of $110,000. The tax rate is 26%, the delivery vehicles are eligible for a Section 179 deduction, and Go Logistics uses an after-tax MARR of 9%. Compute the PW and determine whether the business should invest in the delivery vehicles.
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