Amazon is on a mission to be net zero carbon by 2040. As part of that endeavor they are considering using autonomous delivery vehicles which operate on alternative power sources (solar, battery, recycled oil, etc). The autonomous vehicles are expected to cost $100,000. Amazon wants to invest in 30 to start. They will pay for 30% of the total cost of the autonomous vehicles outright and borrow the other 60%. The loan is borrowed at 11% for 5 years. Each vehicle is estimated to have a salvage vale of $30,000 after 8 years. The autonomous delivery vehicles are expected to be able to deliver 24/7 and therefore are expected to increase revenue by $50,000 per unit per year and an add operating expenses of $10,000 per unit per year. Corporate income taxes follow the table below. a) Develop tables using a spreadsheet to determine the ATCF (After Tax Cash Flow) for the 8 years of the AV’s considering all 30 AVs. Negative taxable income is treated a $0 taxable income.

i. Using straight line depreciation (8 points)

ii. Using MACRS depreciation with the appropriate property class (8 points)

b) If they keep all 30 vehicles for 8 years calculate the Present Worth (PW) and IRR of the investment of all 30 vehicles for each method using an after-tax MARR of 9%. (4 points)