Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $70,000. The truck falls

image text in transcribed

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $70,000. The truck falls into the MACRS 3-year class, is not eligible for either bonus depreciation or Section 179 expensing, and it will be sold after three years for $19,300. Use of the truck will require an increase in NWC (spare parts inventory) of $1,300. The truck will have no effect on revenues, but it is expected to save the firm $23,900 per year in before-tax operating costs, mainly labor. The firm's marginal tax rate is 21 percent. What will the cash flows for this project be? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.) X Answer is complete but not entirely correct. Year 0 1 2 3 FCF $ (71,300.00) $ 23,780.51 S 25,415.15 $ 33,507.34 X

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

Fiduciary Finance Investment Funds And The Crisis In Financial Markets

Authors: Martin Gold

1st Edition

1848448953, 9781848448957

More Books

Students also viewed these Finance questions

Question

Understand a department managers role in locating job candidates

Answered: 1 week ago