You're considering buying a new delivery vehicle for your flower shop, and you have two choices, one with a useful life of 10 years and the other with a useful life of 15 years. The first, Van X, has a useful life of 15 years and will cost you $42,000 in Year 0. You expect it to earn an additional $8,000 per year in profit, and have a salvage value of $2,000 at the end of Year 15. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van X? The second, Van Y, has a useful life of 10 years and will cost you $33,000 in Year 0. You expect it to earn the same additional $8,000 per year in profit, and have a salvage value of $5,000 at the end of Year 10. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van Y? Assume that you reinvest all cash flows at the MARR after the end of the useful life of the van.
You're considering buying a new delivery vehicle for your flower shop, and you have two choices, one with a useful life of 10 years and the other with a useful life of 15 years. The first, Van X, has a useful life of 15 years and will cost you $42,000 in Year 0. You expect it to earn an additional $8,000 per year in profit, and have a salvage value of $2,000 at the end of Year 15. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van X? The second, Van Y, has a useful life of 10 years and will cost you $33,000 in Year 0. You expect it to earn the same additional $8,000 per year in profit, and have a salvage value of $5,000 at the end of Year 10. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van Y? Assume that you reinvest all cash flows at the MARR after the end of the useful life of the van.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You're considering buying a new delivery vehicle for your flower shop, and you have two choices, one with a useful life of 10 years and the other with a useful life of 15 years. The first, Van X, has a useful life of 15 years and will cost you $42,000 in Year 0. You expect it to earn an additional $8,000 per year in profit, and have a salvage value of $2,000 at the end of Year 15. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van X? The second, Van Y, has a useful life of 10 years and will cost you $33,000 in Year 0. You expect it to earn the same additional $8,000 per year in profit, and have a salvage value of $5,000 at the end of Year 10. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van Y? Assume that you reinvest all cash flows at the MARR after the end of the useful life of the van.
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