Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Could you please use double declining balance(DDB) depreciation to solve the answer? Thx A tractor for over-the-road hauling is to be purchased by AgriGrow for

image text in transcribed

image text in transcribedCould you please use double declining balance(DDB) depreciation to solve the answer? Thx

A tractor for over-the-road hauling is to be purchased by AgriGrow for $75,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,500. Transportation cost savings are expected to be $120,000 per year; however, the cost of drivers is expected to be $45,000 per year, and operating expenses are expected to be $41,000 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 $5,500. 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. Use double declining balance depreciation (no half-year convention, no switching). End of Year ATCF 0 $ 1 $ 2 $ 3 $ 4. $ A 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 IRR: % After-tax ERR: % For rates, carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is +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

Research In Finance Volume 24

Authors: Andrew H. Chen

1st Edition

0762313773, 978-0762313778

More Books

Students also viewed these Finance questions

Question

Please help me evaluate this integral. 8 2 2 v - v

Answered: 1 week ago