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ACME is considering purchasing a new van to deliver its products. The van will cost $18,000. It is anticipated that the van will be used for 6 years and then sold for a salvage value of $500. The VAN will be financed 50% with a loan to be repaid in 8 semiannual payments at a rate of 8% compounded semiannual. Annual O & M costs for the van over the 6-ycar life arc estimated to be $700 per year. If the van is purchased, ACME will realize cost savings of $5, 500 per year. ACME uses a MARR of 6%/year. Determine if the purchase of the van is economically feasible.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92264718

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