Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6

image text in transcribed

image text in transcribed

A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance, insurance, and the like. The company's marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that, to AgriGrow's surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,800. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW,IRR, and ERR after only 4 years. Click here to access the TVM Factor Table Calculator Parta Use straight-line depreciation (no half-year convention). After-tax PW: \$ After-tax AW: \$ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10 After-tax PW: $ After-tax AW: $ For dollar amounts, carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is \pm 10 . After-tax IRR: % After-taxERR: For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is \pm 0.2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cryptocurrency Trading From Beginner To Advanced

Authors: Jim Hoffer

1st Edition

1774341247, 978-1774341247

More Books

Students also viewed these Finance questions