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A tractor for over-the-road hauling is to be purchased by AgriGrow for $87.000. It is expected to be of use to the company for 6
A tractor for over-the-road hauling is to be purchased by AgriGrow for $87.000. 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 $160,000 per year; however, the cost of drivers is expected to be $65,000 per year, and operating expenses are expected to be $56,000 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). End of Year End of Year ATCF OS 1 $ 2 $ 4 $ After-tax PW: $ After-tax AW:$
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