help with 12.50

A store owner, Jing Lang, believes his business has suffered from the lack of adequate customer parking space. He may buy an old building and lot next to his store. He would demolish the old building and make off-street parking on the lot. Jing estimates that the new parking would increase his before-income-tax profit by exist7000 per year. It would cost exist2500 to demolish the old building. Mr. Lang's accountant advised that both costs (the property and demolishing the old building) would be considered to comprise the total value of the land for tax purposes, and it would not depreciable. Mr. Lang would spend an additional exist3000 right away to put a light gravel surface on the lot. He believes this may be charged as an operating expense immediately. His combined state and federal incremental income tax rate will average 40%. If Jing wants a 15% after-tax rate of return from this project, how much could he pay to purchase the adjoining land with the old building? Assume that the analysis period is 10 years and that the parking lot could always be sold to recover the costs of buying the property and demolishing the old building. A contractor has to choose one of the following alternatives in performing earth moving contracts: A Buy a heavy-duty truck for exist35.000. Salvage value is expected to be exist8000 at the end of the vehicle's 7-year depreciable life. Maintenance is exist2500 per year. Daily operating expenses are exist200. Hire a similar unit for exist550 per day. Based on a 10% after-tax rate of return, how many days per year must the truck be used to justify its purchase? Base your calculations on straight-line depreciation and a 40% income tax rate. A large profitable company, in the 40% combined federal/state tax bracket, is considering the purchase of a new piece of equipment that will yield benefits of exist10,000 in Year 1. exist15,000 in Year 2, exist20,000 in Year 3, and exist20.000 in Year 4. The equipment is to be depreciated using 5-year MACRS depreciation starting in the sear of purchase (Year 0). It is expected that the equipment will be sold at the end of Year 4 at 20% of its