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Florida Construction Equipment Rentals (FCER) purchases a new 12,000-pound-rated crane for rental to its customers. This crane costs $1,125,000 and is expected to last for
Florida Construction Equipment Rentals (FCER) purchases a new 12,000-pound-rated crane for rental to its customers. This crane costs $1,125,000 and is expected to last for 25 years, at which time it will have an expected salvage value of $150,000. FCER earns $200,000 before-tax cash flow each year in rental income from this crane, and its total taxable income each year is between $10,000,000 and $15,000,000. If FCER uses straight-line depreciation and a MARR of 15%, what is the present worth of the after -tax cash flow for this equipment? Should the crane invest in this crane? (5 Points) Use tax rate as 35%
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