Question: Please write down the calculation method Tucson Solar Company builds residential solar homes. Because of an anticipated increase in business volume, the company is considering

 Please write down the calculation method Tucson Solar Company builds residentialsolar homes. Because of an anticipated increase in business volume, the company

Please write down the calculation method

Tucson Solar Company builds residential solar homes. Because of an anticipated increase in business volume, the company is considering the acquisition of a loader at a cost of $54,000. This acquisition cost includes delivery charges and applicable taxes. The firm has estimated that if the loader is acquired, the additional revenues and operating expenses (excluding depreciation) should be expected as given in the table below. The projected revenue is assumed to be in cash in the year indicated, and all the additional operating expenses are expected to be paid in the year in which they are incurred. The estimated salvage value for the loader at the end of the sixth year is 58,000. The firm's incremental (marginal) tax rate is 25%. Click the icon to view the estimated operating data on the company. Click the icon to view the interest factors for discrete compounding when i= 12% per year. TUVU 1 2 3 $ 30450 $ 35520 $ 34092 $ 32455 $ 26305 $ 25528 4 5 6 (b) What is the equivalent annual cash flow the firm can expect by owning and operating this loader? at an interest rate of 12%? The equivalent annual cash flow is $. (Round to the nearest dollar.) More Info End of Year 1 2 3 4 5 6 O 01 AWN Additional Operating Revenue $66,000 $70,000 $74,000 $80,000 $64,000 $50,000 Additional Operating Expenses, Excluding Depreciation $29,000 $28,400 $32,000 $38,800 $31,000 $25,000 Allowed Tax Depreciation $10,800 $17,280 $10,368 $6,221 $6,221 $3,110 Print Done

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!