Skysong Skydiving Co. is owned by Nick and Amber. Business has been booming, as baby boomers...

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Skysong Skydiving Co. is owned by Nick and Amber. Business has been booming, as baby boomers want to prove their moxie, and the younger generations want to post crazy pictures on social media. So Nick and Amber are planning to purchase a second plane. Here are the specs: Purchase price $200,000 New cash operating costs per year 5,000 Additional gross margin in year 114,500 The owners would use this plane for 10 years, at which point they would sell it and try to replace it with a newer model. They estimate the salvage value to be $73,000 at that time. The company's tax rate is 20%. Determine the ARR for Skysong Skydiving Co. for the first year with this new plane in service. Skysong Skydiving Co. is owned by Nick and Amber. Business has been booming, as baby boomers want to prove their moxie, and the younger generations want to post crazy pictures on social media. So Nick and Amber are planning to purchase a second plane. Here are the specs: Purchase price $200,000 New cash operating costs per year 5,000 Additional gross margin in year 114,500 The owners would use this plane for 10 years, at which point they would sell it and try to replace it with a newer model. They estimate the salvage value to be $73,000 at that time. The company's tax rate is 20%. Determine the ARR for Skysong Skydiving Co. for the first year with this new plane in service.

Answer rating: 100% (QA)

ARR Average Accounting Return is a financial metric that measures the average net income of an inves... View the full answer