Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Could you please use MACRS-GDS as depreciation to calculate the answer? And the red ones are incorrect, that are need to be solved A tractor
Could you please use MACRS-GDS as depreciation to calculate the answer? And the red ones are incorrect, that are need to be solved
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 MACRS-GDS and state the appropriate property class. End of Year ATCF o $ -75000 1 $ A 27248 2 $ 33503 3 $ JANE 16830 4 $ 18168 After-tax PW:$ 2514 After-tax AW: $ 793 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: 12 % After-tax ERR: 11 % 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. Property Class: 3-Year Property V TABLE 8.3 EOY 1 MACRS-GDS percentages for 3-, 5-, 7-, and 10-year property are 200% DBSLH and 15-and 20-year property are 150% DBSLH 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year Property Property Property Property Property Property 33.33 20.00 14.29 10.00 5.00 3.750 44.45 32.00 24.49 18.00 9.50 7.219 19.20 14.40 6.677 7.41 12.49 11.52 7.70 6.177 6.93 5.713 7.37 6.23 5.285 2 2 14.81 17.49 8.55 4 11.52 5 11.52 8.93 9.22 6 5.76 8.92 7 8.93 6.55 5.90 4.888 od 8 4.46 6.55 5.90 4.522 9 6.56 5.91 4.462 10 6.55 5.90 4.461 11 3.28 5.91 4.462 12 5.90 4.461 13 5.91 4.462 14 5.90 4.461 15 5.91 4.462 16 2.95 4.461 17 4.462 18 4.461 19 4.462 20 4.461 21 2.231Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started