zero. Annual receipts is ar study period. The con a good investment using

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A new garbage truck can be purchased for $64,000. Its expected useful life is six years at
which time its market value will be zero. Annual receipts is expected to be $20,000 with expenses
of $2,000 per year over the six-year study period. The company's MARR is 18%.
a.
What is the ROI?
b.
Determine if this is a good investment using Net Present Worth(NPW) method.
What is its Net Annual Worth?
с.
d.
Using IRR method, is this investment acceptable?
Transcribed Image Text:A new garbage truck can be purchased for $64,000. Its expected useful life is six years at which time its market value will be zero. Annual receipts is expected to be $20,000 with expenses of $2,000 per year over the six-year study period. The company's MARR is 18%. a. What is the ROI? b. Determine if this is a good investment using Net Present Worth(NPW) method. What is its Net Annual Worth? с. d. Using IRR method, is this investment acceptable?
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