Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Periodic cash inflows Scenic Tours, Inc., is a provider of bus tours throughout New England. The corporation is considering the replacement of 13 of its

image text in transcribedimage text in transcribed

Periodic cash inflows Scenic Tours, Inc., is a provider of bus tours throughout New England. The corporation is considering the replacement of 13 of its older buses. The existing buses were purchased 4 years ago at a total cost of $2,737,000 and are being depreciated using MACRS and a 5-year recovery period (see table ). The new buses would have larger passenger capacity and better fuel efficiency as well as lower maintenance costs. The total cost for 13 new buses is $2,968,000. Like the older buses, the new ones would be depreciated using MACRS and a 5 -year recovery period. Scenic is subject to a tax rate of 21%. The following table presents revenues and cash expenses (excluding depreciation and interest) for the proposed purchase as well as the present fleet. Use all of the information given to calculate incremental (net) periodic cash flows for the proposed bus replacement. With the proposed new buses (000) Revenue Expenses (exclud. deprec. and int.) With the present buses (000) Revenue Expenses (exclud. deprec. and int.) Calculate the incremental (net) periodic cash flows below: (Round to the nearest dollar.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Rounded Depreciation Percentages by Recovery Year Using MACRS for Firet Eni, Drnnort, Clacese retaining realism. To calculate the actual depreciation for tax purposes, be sure to apply the actual unrounded percentages or directly apply double-declining balance (200%) depreciation using the half-year convention

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

Students also viewed these Finance questions