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Mary Tracking Inc. is planning to buy a new truck to replace its old truck. The new truck costs $50,000 and will be straight-line depreciated
Mary Tracking Inc. is planning to buy a new truck to replace its old truck. The new truck costs $50,000 and will be straight-line depreciated to a zero book value in 5 years. The market value of the new truck in years is expected to be $8,000 in years. The after-tax salvage of the old truck in 5 years is estimated to be $1.000. Assume a tax rate of 35% and a required rate return of 10%. The year 5 net capital spending (NCS) for this replacement project is
a)$ 5,200
b)$8,000
c)$7,000
d)$1,000
e)$4,200
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