Prepare and submit your solution to the New economy transport case A

MN-GAS-... New Economy Transport (A) The New Economy Transport Company (NETCO) was formed in 1959 to carry cargo and pas sengers between ports in the Pacific Northwest and Alaska. By 2012 its fleet had grown to four vessels, including a small dry-cargo vessel, the Vital Spark The Vital Spark is 25 years old and badly in need of an overhaul. Peter Handy, the finance directot has just been presented with a proposal that would require the following expenditures Overhaul engine and generators Replace radar and other electronic equipment Repairs to hull and superstructure Painting and other repains 75,000 310.000 Mr. Handy believes that all these outlays could be depreciated for tax purposes in the seven-year MACRS class NETCO's chief engineer, McPhail, estimates the postoverhaul operating costs as follows 450,000 480,000 141,000 110,000 Labor and benefits Maintenance These costs generally increase with inflation, which is forecasted at 2.5% a year. The Vital Spark is carried on NETCO's books at a net depreciated value of only $100,000, but could probably be sold "as is," along with an extensive inventory of spare parts, for $200,000