Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLEASE PROVIDE SOLUTION TO ONE OF THE ANSWERS (A-E) BELOW Lemington Enterprises is considering a project to replace its fleet of 10 vehicles. The company

PLEASE PROVIDE SOLUTION TO ONE OF THE ANSWERS (A-E) BELOW

Lemington Enterprises is considering a project to replace its fleet of 10 vehicles. The company makes its fleet replacement decision every five years. Its current fleet of 10 vehicles was purchased five years ago at $50,000 each, and can be sold for $8,000 each today. The new vehicles will cost $60,000 each and will bring cost savings of $100,000 per year. In five years, the new vehicles can be sold for $9,000 each. If the fleet is not replaced today, the current fleet will have no salvage value in five years time. The CCA rate on these vehicles is 30%, and the companys marginal tax rate is 35%. What is the PV(CCATS) for this replacement project, assuming a required rate of return of 10%? Round your answer to the nearest dollar.

Select one:

a. $115,626

b. $135,672

c. $130,295

d. $13,567

e. $148,711

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

Production And Operations Analysis

Authors: Steven Nahmias

6th Edition

0073377856, 9780073377858

More Books

Students also viewed these Finance questions