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Table 4-2 Percentage by recovery year Recovery Year 3 Years 5 Years 7Years 10 Years 1 33% 20% 14% 10% 2 45% 32% 25% 18%
Table 4-2
Percentage by recovery year
Recovery Year 3 Years 5 Years 7Years 10 Years
1 33% 20% 14% 10%
2 45% 32% 25% 18%
3 15% 19% 18% 14%
4 7% 12% 12% 12%
5 12% 9% 9%
6 5% 9% 8%
7 4% 7%
8 6%
9 6%
10 6%
11 4%
11-3: Your company wants to replace the fleet of light-duty trucks for the truck leasing division, which began with a single purchase four years ago at a cost of $400,000. The fleet can be sold today for $130,000 and will be depreciated using MACRS, per Table 4.2. The new fleet will be purchased for $600,000, ready to go. The tax rate is 34%. Assume no change to net working capital for the replacement. (A) Determine the book value of the current fleet. (B) Determine the after-tax receipts from the sale of the existing fleet. (C) Determine the replacement project's initial investmentStep by Step Solution
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