Problem
Fleet Fleet rental car company purchased 10 new cars for a total cost of $180,000. The cars generated income of $150,000 per year and incurred operating expenses of $60,000 per year. The company uses MACRS depreciation and its marginal tax rate is 40% (Note: Per IRS regulations, cars have a class life of 5 years). The 10 cars were sold at the end of the third year for a total of $75,000. Assuming a MARR of 10% and using NPW, determine if this was a good investment on an after-tax basis. Contributed by Mukasa Ssemakula, Wayne State University.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.