Question

Swifty corporation purchased a delivery van with a 75000 list price. The company was given a 4600 cash discount by the dealer and paid 2500 sales tax. The annual insurance on the van is 1700. As a result of the purchase, by how much will Swifty corporation increase?

1) 73300
2) 70400
3) 72900
4) 75000

Answer 1

Swifty Corporation's expenses will increase by $73,900 due to the purchase of a delivery van, after taking into account the cash discount, sales tax, and annual insurance.

Step-by-step explanation:

Swifty Corporation will increase its expenses by $73,900 as a result of the purchase of the delivery van. To determine the total cost of the van, we must consider the list price, cash discount, sales tax, and annual insurance costs as part of the calculation.

We start with the list price of $75,000 and subtract the cash discount of $4,600, which gives us $70,400. Now, we need to add the sales tax of $2,500 to the amount after discount, resulting in $70,400 + $2,500 = $72,900. The annual insurance cost of $1,700 is an additional expense related to the purchase. Therefore, we add this to the previous total, resulting in a final amount of $72,900 + $1,700 = $73,900.