Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 4

A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under MACRS as five-year property. The truck's market value (salvage value) is expected to decrease by $2,500 per year. It is expected that the purchase of the truck will increase its revenue by $10,000 annually. The O M costs are expected to be $3,000 per year. The firm is in the 40% tax bracket, and its MARR is 15%. If the company plans to keep the truck for only two years, what would be the equivalent present worth?