Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cabaran that she purchased five years ago for $100,000. When cruise ships se does snorkeling trips for the tourists. It is being depreciated straight-line over

image text in transcribed
image text in transcribed
Cabaran that she purchased five years ago for $100,000. When cruise ships se does snorkeling trips for the tourists. It is being depreciated straight-line over its expected ite and is currently worth $35,000. It is expected to have no value at the end of the years. She is considering moving to a larger boat that can accommodate more Stelas found a deal on a nice used boat for $125,000. The new boat would be clied straight the over its five year life. Consuela expects that revenues would increase by 550.000 per year, but she will have to hire more crew to work with the drunken tourists and use el penses will increase by an expected $12,500. She expects that the new boat taly be worth $20,000 in five years. Consuela's marginal tax rate is 30% and her and to return is 15%. Should she replace her boat? D Question 2 Consuela owns a catamaran that she purchased five years ago for $100,000. When cruis visit her city she does snorkeling trips for the tourists. It is being depreciated straight-lin 10 year expected life and is currently worth $35,000. It is expected to have no value at is life in five years. She is considering moving to a larger boat that can accommodate m people. She has found a deal on a nice used boat for $125,000. The new boat would be depreciated straight-line over its five year life. Consuela expects that revenues would in $50,000 per year, but she will have to hire more crew to work with the drunken tourists more fuel, so expenses will increase by an expected $12,500. She expects that the new would actually be worth $20,000 in five years. Consuela's marginal tax rate is 30% and required rate of return is 15%. Should she replace her boat

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

Brilliant Book Keeping How To Keep Your Business Efficient And Cost Effective

Authors: Martin Quinn

1st Edition

0273731785,0273746707

More Books

Students also viewed these Finance questions