What is the minimum uniform annual revenue

Reference no: EM131958008

Question: A company is considering the purchase of a new service truck. The total cost of the new truck is $48,000. Its useful life is 5 years after which it will be sold for $10,000. The new truck's estimated annual operating expenses in year zero dollars is $2, 500 and is expected to increase by 5% per year over its life. The general rate of inflation over the next 5 years is projected to average 2% per year and the company's real interest rate is 17.65%. On a before-tax basis, what is the minimum uniform annual revenue that must be achieved over the truck's useful life to justify the new truck purchase? {The minimum uniform annual revenue would result in breakeven or PW equal to zero.}

Reference no: EM131958008

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