Cash inflow from selling the old helicopter

Assignment Help Accounting Basics

Reference no: EM13154793

Bar T Ranches, Inc. is considering buying a new helicopter for $350,000. The company's old helicopter has a book value of $85,000, but will only bring $60,000 if it is sold. The old helicopter can be depreciated at the rate of $13,500 per year for the next four years. The new helicopter can be depreciated using the 5-year MARCS schedule. The new helicopter is expected to save $62,000 after taxes through reduced fuel and maintenance expenses. Bar T Ranches is in the 34% tax bracket and has a 12% cost of capital.

a. What is the cash inflow from selling the old helicopter?

b. What is the net cost of the new helicopter?

c. Calculate the incremental depreciation of the new helicopter

d. Calculate the net cash flows for the purchase

e. Calculate the net present value of the helicopter purchase and state whether or not the firm should buy it

Reference no: EM13154793

Questions Cloud

Flip a coin 20 times : Flip a coin 20 times and 5 heads are obtained. Let p denote the probability of getting a head from each flip. Do a conservative test of size 0.06 for H0:p= 0.4

Principal differences between activity-based costing : What are the principal differences between activity-based costing (ABC) and traditional product costing?

What policy might you suggest to the government : what will happen to the price level and output? Using the AS/AD model, demonstrate your predictions graphically. what policy might you suggest to the government?

Derive a conservative : Derive a conservative one-sided upper 95% confidence interval for θ if x=4 is observed.

Cash inflow from selling the old helicopter : What is the cash inflow from selling the old helicopter? What is the net cost of the new helicopter? Calculate the incremental depreciation of the new helicopter

What is the nash equilibrium price charged by firm : The marginal cost of production is $1.40 to firm 1 and $3.20 to firm 2. The transportation cost is $1 per mile. What is the Nash equilibrium price charged by firm 1? What is the Nash equilibrium price charged by firm 2?

What is the partial pressure of the nitrogen gas : A mixture of O2, CO2, and N2 has a total pressure of 697. torr. In this mixture the partial pressure of O2 is 143. torr and the partial pressure of CO2 is 197. torr. What is the partial pressure of the N2 (in torr)?

What is the objective of accounting standards : A sound foundation is necessary for success in any task from building a house to putting on make-up. In terms of U.S. Accounting Standards, it is also necessary to have a sound foundation, referred to as the conceptual framework. Let's discuss it ste..

Discuss the steps the oligopoly should take to address : Assume that a very competitive start-up enters the market in direct competition with the oligopoly you described in the e-Activity, initially gaining a 12% market share.

User Account

All Pages