Question: Chaotic Industries is considering an investment in a fleet of ten delivery vans to take its products to customers. The vans will cost £15,000 each to buy, payable immediately. The annual running costs are expected to total £20,000 for each van (including the driver's salary). The vans are expected to operate successfully for six years, at the end of which period they will all have to be sold, with disposal proceeds expected to be about £3,000 a van. At present, the business uses a commercial carrier for all of its deliveries. It is expected that this carrier will charge a total of £230,000 each year for the next six years to undertake the deliveries. What is the ARR of buying the vans? (Note that cost savings are as relevant a benefit from an investment as are net cash inflows.)