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The Unique Bookshelf Company is considering the purchase of a custom delivery van costing approximately $60,000

Accounting

The Unique Bookshelf Company is considering the purchase of a custom delivery van costing approximately $60,000. Using a discount rate of 25%, the present value of future cost savings is estimated at $61,200. To yield the 25% return, the actual cost of the van should not exceed the estimate by more than:

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Computation of the actual cost of van should not exceed by:-

Actual cost of van should not exceed by = Present value - Purchase cost

= $61,200 - $60,000

= $1,200

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