please solve 11.26 and 11.28
lease. Ans.8% 11.26 A truck was bought 10 years ago for $70 000; its current salvage value is $14 000. It is believed that it can last 5 more years, at which time its salvage value will be $8000. Its operating expenses amount to $140,00 per year and they are expected to remain at that level for the next 5 years. The truck is currently being depreciated by the straight-line method, using a 15-year life and estimated salvage value of $10 000, A new truck can be purchased for $65 000. It will have yearly operating costs of $9000 and would last 20 years; salvage value after 20 years is estimated at $15 000. Again, straight-line depreciation would be used. Supposing that tax rates are 50% on income and 15% on capital gains (or losses), and that the company's after-tax MARR is 10%, should it buy the new truck? Ans. No: after-tax EUACold - $7967, after-tax EUACnew = $10 623A 11.27 A $60 000 asset will be depreciated by the straight-line method over a six-year period. No salvage wa is expected. If the company's tax rate is 50%, what would be the present-worth advantage of sum-of-years'-digits method, given a 10% after-tax MARR? Ans. $1184 11.28 Rework Problem 11.26 using the ACRS for the new truck, classified as a 10-year asset. is still depreciated by the straight-line method. Ans. No: after-tax EUACold - $7967, after-tax EUACnew = $9481 ed as a 10-year asset. The current truck lease. Ans.8% 11.26 A truck was bought 10 years ago for $70 000; its current salvage value is $14 000. It is believed that it can last 5 more years, at which time its salvage value will be $8000. Its operating expenses amount to $140,00 per year and they are expected to remain at that level for the next 5 years. The truck is currently being depreciated by the straight-line method, using a 15-year life and estimated salvage value of $10 000, A new truck can be purchased for $65 000. It will have yearly operating costs of $9000 and would last 20 years; salvage value after 20 years is estimated at $15 000. Again, straight-line depreciation would be used. Supposing that tax rates are 50% on income and 15% on capital gains (or losses), and that the company's after-tax MARR is 10%, should it buy the new truck? Ans. No: after-tax EUACold - $7967, after-tax EUACnew = $10 623A 11.27 A $60 000 asset will be depreciated by the straight-line method over a six-year period. No salvage wa is expected. If the company's tax rate is 50%, what would be the present-worth advantage of sum-of-years'-digits method, given a 10% after-tax MARR? Ans. $1184 11.28 Rework Problem 11.26 using the ACRS for the new truck, classified as a 10-year asset. is still depreciated by the straight-line method. Ans. No: after-tax EUACold - $7967, after-tax EUACnew = $9481 ed as a 10-year asset. The current truck
