What is the incremental ror between the two vehicles

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Reference no: EM132200949

Question: The CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners for company principals. The purchase price for the Ford Explorer will be $29,750. Annual maintenance costs for the Explorer are expected to be $775 per year more than that of the 4Runner. The purchase price for Toyota 4Runners is 35,500 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the incremental ROR between the two vehicles? (b) Provided the firm's MARR is 15% per year, which vehicle should it buy?

a) The incremental ROR between the two vehicles is (WHAT IS THE ANSWER? ) %.

b) The firm should buy (Click to select) (Ford Explorer OR Toyota) 4Runner as the incremental ROR is (Click to select) (greater than OR less than) the MARR.

Reference no: EM132200949

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