Please show all calculations and steps since we are doing it by hand without excel or a
Fantastic news! We've Found the answer you've been seeking!
Question:
Please show all calculations and steps since we are doing it by hand without excel or a financial calculator.
Transcribed Image Text:
A company is considering replacing one of its delivery trucks that it had purchased for $54,000 two years ago. This truck was estimated to have a six year life, a $12,000 salvage value, and it is being depreciated on a straight line basis. Its current market value is $26,000 now and is estimated to be $6,000 in four years. The annual cash operating costs of the old truck are expected to be $35,000 for each of the next 3 years and $40,000 in year 4. The new truck would cost $56,000. Annual cash operating costs are expected to be $25,000 per year over its expected life of 4 years. At that time, it is estimated that the new truck could be sold for $8,000. If the company uses a rate of return of 10% for capital budgeting decisions and the tax rate is 30%, should the company buy the new truck? A company is considering replacing one of its delivery trucks that it had purchased for $54,000 two years ago. This truck was estimated to have a six year life, a $12,000 salvage value, and it is being depreciated on a straight line basis. Its current market value is $26,000 now and is estimated to be $6,000 in four years. The annual cash operating costs of the old truck are expected to be $35,000 for each of the next 3 years and $40,000 in year 4. The new truck would cost $56,000. Annual cash operating costs are expected to be $25,000 per year over its expected life of 4 years. At that time, it is estimated that the new truck could be sold for $8,000. If the company uses a rate of return of 10% for capital budgeting decisions and the tax rate is 30%, should the company buy the new truck?
Expert Answer:
Answer rating: 100% (QA)
Final Answer SrNo Option Net Present Value of Cash Outflow 1 ... View the full answer
Posted Date:
Students also viewed these economics questions
-
Use a Web site or a financial calculator to determine the monthly mortgage payment (excluding property taxes and insurance) on a $ 90,000 mortgage if the Sampsons obtain a new 30- year mort-gage at...
-
Use a website or a financial calculator to determine the monthly mortgage payment (excluding property taxes and insurance) on a $150,000 mortgage, if the Sampsons obtain a new mortgage at an interest...
-
The Bold sections are the given questions needed answered, here is the context: The background you learned is that some companies use excess cash to buy long-term investments (assets on the balance...
-
1. What are some other ways in which HEALTHeLINK could be used to support public health activities?
-
What were the outcomes of the study? Who can use these results? How can the results be implemented?
-
Loring Company incurred the following costs last year: Direct materials ..................$216,000 Factory rent ...................24,000 Direct labor ....................120,000 Factory utilities...
-
Presented below are selected financial data for two competitors. Discuss why the return on assets increased for Company A but decreased for Company B. Company A. Company B Return on Assets Return on...
-
1. Using the sales forecasts for Tysabri presented in Exhibit A, and using the discounted cash flow model presented in Exhibit B, what do you think Elan is worth? 2. What other considerations do you...
-
Problem 20-30 (Algo) It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly...
-
The following trial balance was extracted from the books of JCV Ltd. as at 30 September 2019: $ $ Land and buildings 151,000 Motor vehicles at cost 60,000 Accumulated depreciation on motor vehicle (1...
-
The point (x1, y1) on the plane is said to dominate another point (x2, y2) if it lies to the right and above from it, that is, x1 > x2 and y1 > y2. A point inside the given list of points is...
-
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third...
-
A medical center in Illinois lost its tax-exempt status because of aggressive patient-collection tactics and because the organization had contracted with several for-profit entities to fulfill key...
-
ESG stands for Environmental, Social, and Governance. Since its introduction by the United Nations in 2004, ESG integration has been considered one of the latest and most widely adopted...
-
West Side Deli is a local family-owned restaurant that has built up a reputation of providing high quality lunches to its customers.Cassandra has been able to effective use the multiproduct...
-
Following are transactions of Danica Company. December 13 Accepted a $28,000, 45-day, 2% note in granting Miranda Lee a time extension on her past-due account receivable. December 31 Prepared an...
-
Which one of the following is NOT an accurate statement related to the development graphs displayed in the CoStar product? A) The Rooms Delivered graphs shows valuable information about hotel...
-
Provide a draft/outline of legal research involving an indigenous Canadian woman charged with assault causing bodily harm under (Sec 267b) of the Criminal Code, where the crown wants a 12-month jail...
-
Select a 50 % random subsample of the Section 4.9.6 data on earnings and education, and reproduce as much of Table 4.5 as possible and provide appropriate interpretation. Table 4.5. Returns to...
-
Simplify \(2^{1 / 2} 5^{1 / 2} 4^{-1 / 4} 20^{1 / 4} 5^{-1 / 4} \sqrt{10}\).
-
Show that \((50)^{3 / 4}\left(\frac{5}{\sqrt{2}} ight)^{-1 / 2}=10\).
Study smarter with the SolutionInn App