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Problem 4 A medium-sized profitable corporation is considering the purchase of a $3000 used pickup truck for use by the shipping and receiving department. During
Problem 4 A medium-sized profitable corporation is considering the purchase of a $3000 used pickup truck for use by the shipping and receiving department. During the truck's 5-year useful life, it is estimated that the firm will save $800 per year after all the costs of owning and operating the truck have been paid. Truck salvage value is estimated at $750. Assume a 34 percent tax rate. a. Make the before-tax and after-tax cash flow table. b. What is the before-tax rate of return? C. Assuming a straight-line deprecation, what is the after-tax rate of return? Problem 4 A medium-sized profitable corporation is considering the purchase of a $3000 used pickup truck for use by the shipping and receiving department. During the truck's 5-year useful life, it is estimated that the firm will save $800 per year after all the costs of owning and operating the truck have been paid. Truck salvage value is estimated at $750. Assume a 34 percent tax rate. a. Make the before-tax and after-tax cash flow table. b. What is the before-tax rate of return? C. Assuming a straight-line deprecation, what is the after-tax rate of return
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