Salvage value-what is the net present worth

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Reference no: EM131897251

A local delivery company has purchased a delivery truck for $20,000. The truck will be depreciated under MACRS as a five-year property. The trucks market value (salvage value) is expected to decrease by $2,300 per year. It is expected that the purchase of the truck will increase its revenue by $20,000 annually. The O&M costs are expected to be $4,600 per year. The firm is in the 40% tax bracket, and its MARR is 12.3%. If the company plans to keep the truck only two years, what is the net present worth?

Reference no: EM131897251

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