Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I need to calulate the net income, operating cash flows and cash flow from assets when comparing 2 cars. There are a few assumptions that
I need to calulate the net income, operating cash flows and cash flow from assets when comparing 2 cars. There are a few assumptions that are being made:
*21% corporate tax rate
*8% cost of capital/discount rate
*Depreation is an expense
*Cars are driven 40,000 miles per year
*Cars are replaced at the end of 4 years
*Both cars generate 20,000 annual revenue
*Gas price is $2.68
*Car A's price: 36,970 Highway milage: 28 miles
*Car B's price: 31,330 Highway milage: 24 miles
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