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Bobby Jones, the club pro at Pebble Beach Golf Club, is considering replacing his fleet of golf carts. He bought the existing fleet of 1
Bobby Jones, the club pro at Pebble Beach Golf Club, is considering replacing his fleet of golf carts. He bought the existing fleet of
EZGO carts two years ago for $ per cart. He is considering replacing them with a new model Club Car. Each Club Car has
GPS a cooler, and a ballclub cleaner and costs $ The golf carts are year property with depreciation rates of
and in the first four years.
If Mr Jones sold the EZGO carts today, he could get $ for each cart. One advantage of buying the new carts is that they are more
durable and so he can carry a smaller inventory of spare parts. Bobby figures his inventory will drop by $
If Bobby goes ahead with the golf cart replacement, what are the initial cash flows? Assume a tax rate of Round your answer to
the nearest dollar.
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