Question
(Ignore income taxes in this problem) Buse Corporation is investigating buying a small used aircraft for the use of its executives. The aircraft would have
(Ignore income taxes in this problem) Buse Corporation is investigating buying a small used aircraft for the use of its executives. The aircraft would have a useful life of 8 years. The company uses a discount rate of 14% in its capital budgeting. The net present value of the investment, excluding the salvage value of the aircraft, is -$488,487. Management is having difficulty estimating the salvage value of the aircraft. To the nearest whole dollar how large would the salvage value of the aircraft have to be to make the investment in the aircraft financially attractive?
Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables.
rev: 01_14_2016_QC_CS-37603
$488,487
$68,388
$3,489,193
$1,391,701
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