You are evaluating a potential purchase of several light-duty trucks. The initial cost of the trucks will be $170,000. The trucks fall in the MACRS 5-year class that allows depreciation of 20% the first year, 32% the second year, 19% the third year, 12% the fourth year, 11% the fifth year, and 6% the sixth year. You expect to sell the trucks for 20,400 at the end of five years. The expected revenue associated with the trucks is $135,000 per year with annual operating costs of $69,000. The firm's marginal tax rate is 25.0%. What is the after-tax operating cash flow for year 5?
$54,175 |
$35,475 |
$49,500 |
$47,300 |
$18,700 |
You are evaluating a potential purchase of several light-duty trucks. The initial cost of the trucks...
You are evaluating a potential investment in equipment. The equipment's basic price is $158,000, and shipping costs will be $6,300. It will cost another $15,800 to modify it for special use by your firm, and an additional $7,900 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 26,300 at the...
You are evaluating a potential investment in equipment. The equipment's basic price is $187,000, and shipping costs will be $3,700. It will cost another $22,400 to modify it for special use by your firm, and an additional $9,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,500 at the...
Question 30 (3.5 points) You are evaluating a potential investment in equipment. The equipment's basic price is $190,000, and shipping costs will be $5,700. It will cost another $24,700 to modify it for special use by your firm, and an additional $11,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15 % the third year, and 7% the fourth year. You expect to sell the...
1) You are evaluating a potential investment in equipment. The equipment's basic price is $187,000, and shipping costs will be $3,700. It will cost another $22,400 to modify it for special use by your firm, and an additional $9,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,500 at...
Your company, Jim's Whole Grains, is evaluating the potential purchase a new oven to bake sandwich buns. If purchased, the new oven will replace the existing oven, which was purchased seven years ago for $1,000,000. Depreciation on the old oven has been computed on a straight-line basis over its expected 15 year life to an ending book value of $100,000, even though you expected it to be worthless at that time. The new oven will cost $2,000,000 and will fall...
CCC Conglomerates is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 12 percent rate of return and uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of $378,000, annual operating costs of $22,000, and a 3-year life. Machine B costs $257,000, has annual operating costs of $43,000, and a 2-year...