Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Liberty Airways is considering an investment of $730,000 in ticket purchasing kiosks at selocted airports. The kiosks (hardware and sottware) have an expected life of

image text in transcribed
image text in transcribed
Liberty Airways is considering an investment of $730,000 in ticket purchasing kiosks at selocted airports. The kiosks (hardware and sottware) have an expected life of four years. Extra ticket sales are expected to be 70,000 per year at a discount price of $44 per ticket. Fixed costs, excluding depreciation of the equipment, are $400,000 per year, and variable costs are $28 per ticket. The kiosks will be depreciated over four years, using the SL mothod with a zero salvage value. The onetime commitment of working capital is expected to be 1/10 of annual sales dollars. The after-tax MARR is 15% per year, and the company pays incorne tax at the rate of 29%. What's the after-tax PW of this proposed investment? Should the imvestment be made? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 15% per year. The after-lax PW of this proposed investment is 5 thousand. (Round to the nearest whole number.) Discrete Compounding; i=15%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Decision Makers

Authors: Eddie McLaney, Peter Atrill

4th Edition

9780273688471

More Books

Students also viewed these Accounting questions

Question

=+ Do you think it is a wise investment of the firm?

Answered: 1 week ago