Question
GeoExpress is considering the purchase of a used truck for its delivery business in order to serve a new geographical area. Investment in the truck
GeoExpress is considering the purchase of a used truck for its delivery business in order to serve a new geographical area. Investment in the truck includes the purchase price $8,980 and an additional $1,400 for shelving and other modifications to get the truck ready for service - these expenditures will be capitalized in Year 0. They will not be expensed until the first year after their purchase and installation. GeoExpress has already paid $22 for a CARFAX report to ensure the truck had not been in any accidents. Startup advertising expense will be $1,339 and acquisition of the truck will result in $571 of additional inventory and $432 of accounts payableboth the advertising and the working capital changes will be incurred in Year 0. GeoExpress has a tax rate of 36%. What is the Time 0 (initial) cash flow resulting from the proposed acquisition?
Step 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