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Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $50,000 and will generate constant-dollar delivery revenue of $20,000 (year O dollars) for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 21%, and annual inflation is 3%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Fink Co. uses an after-tax real interest MARR of 8%, compute the PW, and determine whether Fink Co. should purchase the new business vehicle.

Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $50,000 and will generate constant-dollar delivery revenue of $20,000 (year O dollars) for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 21%, and annual inflation is 3%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Fink Co. uses an after-tax real interest MARR of 8%, compute the PW, and determine whether Fink Co. should purchase the new business vehicle.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please do not use excel, use formals or TVM  table

**Fink Co. Business Vehicle Investment Analysis** Fink Co. is considering the purchase of a new business vehicle. The vehicle costs $50,000 and is expected to generate a constant-dollar delivery revenue of $20,000 annually for the next 6 years. At the end of the 6-year period, the vehicle will have a salvage value of $5,000. The tax rate applicable is 21%, and the annual inflation rate is estimated at 3%. The vehicle is to be depreciated using the Modified Accelerated Cost Recovery System (MACRS) with a 5-year property class. Additionally, Fink Co. uses an after-tax real Minimum Attractive Rate of Return (MARR) of 8%. **Objective:** Calculate the Present Worth (PW) and determine if Fink Co. should proceed with the purchase. - Click [here](#) to access the Time Value of Money (TVM) Factor Table calculator. - Click [here](#) to access the MACRS-GDS Property Classes. - Click [here](#) to access the MACRS-GDS percentages page. - Click [here](#) to access the MACRS-GDS percentages for 27.5-year residential rental property. [Input field for calculation] **Note:** The resources linked are intended to help in accurately calculating the financial metrics necessary for this investment decision.
Transcribed Image Text:**Fink Co. Business Vehicle Investment Analysis** Fink Co. is considering the purchase of a new business vehicle. The vehicle costs $50,000 and is expected to generate a constant-dollar delivery revenue of $20,000 annually for the next 6 years. At the end of the 6-year period, the vehicle will have a salvage value of $5,000. The tax rate applicable is 21%, and the annual inflation rate is estimated at 3%. The vehicle is to be depreciated using the Modified Accelerated Cost Recovery System (MACRS) with a 5-year property class. Additionally, Fink Co. uses an after-tax real Minimum Attractive Rate of Return (MARR) of 8%. **Objective:** Calculate the Present Worth (PW) and determine if Fink Co. should proceed with the purchase. - Click [here](#) to access the Time Value of Money (TVM) Factor Table calculator. - Click [here](#) to access the MACRS-GDS Property Classes. - Click [here](#) to access the MACRS-GDS percentages page. - Click [here](#) to access the MACRS-GDS percentages for 27.5-year residential rental property. [Input field for calculation] **Note:** The resources linked are intended to help in accurately calculating the financial metrics necessary for this investment decision.
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