Flower Shop Project

Flower Shop Project

ACT 201
Welcome to the Flower Shop
“We deliver on time every time!”
Delivery Service Plan and Depreciation Breakdown

Delivery Vehicle Purchase Information
1. 2004 Chevrolet Astro Cargo Van, Rear Wheel Drive
a. Total cost with options: $25,000.00 including tax, title, and license.
b. Warranty: 3 years or 36,000 miles
c. Features: Vortec V6 engine; rear cargo panel doors; sliding passenger side cargo doors; all season tires; tinted windows; rear auxiliary heat; interior lighting; and adjustable outside rearview mirrors
d. Reason for purchasing this vehicle:   After many comparisons, I have found that the Astro Cargo Van has a higher book value than it is competitors. The cargo area is large and has easy access through side or rear doors. Gas mileage is also better than it is competitors. The Astro Van gets 17 mpg in the city and 21 mpg on the highway. Parts and service are readily available and the vehicle is easily maintained with proper scheduled maintenance.
2. Useful Service and Salvage value:
a. Useful life of the Astro Cargo Van is 4 years or 100,000 miles.
b. Salvage value of the Astro Cargo Van after useful life is $5,000

Comparison of Cost to Acquire Cargo Van
1. Purchase Outright:
a. Pros
i. Pay $25,000 for vehicle – You own it outright.   If financed you own at the end of financing You can claim depreciation for the vehicle
ii. Costs include cash price or down payment; taxes; title and license fees
b. Cons:
i. If financed loan payments are more than lease payments
ii. You must pay off cost of vehicle if you end the loan early
iii. You have to sell or trade vehicle at end of useful life
2. Leasing:
a. Pros:
i. You do not have to worry about selling or trading in vehicle at the end of the lease
ii. You have an option to purchase at the end of the lease
b. Cons:
i. You do not own the vehicle
ii. You cannot claim depreciation for the vehicle
iii. You have to pay for maintenance, repair.
iv. You are responsible for...