Tabletop Ranches Tabletop Ranches Inc. is considering the purchase of a new helicopter for $300,000. The firm's
Question:
Tabletop Ranches Tabletop Ranches Inc. is considering the purchase of a new helicopter for $300,000. The firm's old helicopter has a book value of $60,000 but can be sold today for $30,000. The new helicopter will be subject to a CCA rate of 25 percent. It is expected to save $70,000 per year for 8 years through reduced fiel and maintenance expenses. The company will need to invest $12,000 in spare parts inventory (working capital) when they purchase the helicopter. At the end of the 8 years the company believes it can sell the helicopter for $40,000. Tabletop Ranches has a 12 percent cost of capital and a 30 percent tax rate.
Required:
a. Complete the following table by entering the present value, after-tax, of each of the following cash flows.
• Round all cash flow numbers to zero decimal places.
• Enter cash outflows as negative numbers.
• Enter Net' numbers for each cash flow. (eg working capital, net of recovery)
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling