Albatross Airlines is evaluating the acquisition of a new airplane. Its price is $40,000 and it...
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Albatross Airlines is evaluating the acquisition of a new airplane. Its price is $40,000 and it will be in CCA class 9 (25%). Purchase of the new plane would involve the CA purchase of $2,000 in part for $2,000. Before tax revenues will increase by $20,000 per year with a matching increase in expenses for $5,000 per year. The plan will be used by 3 years and then be sold for $25,000. The firm's tax rate is 40% and its cost of capital is 14%. Find NPV. Albatross Airlines is evaluating the acquisition of a new airplane. Its price is $40,000 and it will be in CCA class 9 (25%). Purchase of the new plane would involve the CA purchase of $2,000 in part for $2,000. Before tax revenues will increase by $20,000 per year with a matching increase in expenses for $5,000 per year. The plan will be used by 3 years and then be sold for $25,000. The firm's tax rate is 40% and its cost of capital is 14%. Find NPV.
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Answer rating: 100% (QA)
Answer Solution Year 1 2 3 Revenues 20000 20000 20000 Less Expenses 5000 5000 5000 15000 15000 15... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
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