Good investment on an after-tax basis

Assignment Help Business Economics
Reference no: EM131810403

Fleet Fleet rental car company purchased 10 new cars for a total cost of $180,000. The cars generated income of $150,000 per year and incurred operating expenses of $60,000 per year. The company uses MACRS depreciation and its marginal tax rate is 40% (Note: Per IRS regulations, cars have a class life of 5 years). The 10 cars were sold at the end of the third year for a total of $75,000. Assuming a MARR of 10% and using NPW, determine if this was a good investment on an after-tax basis. Contributed by Mukasa Ssemakula, Wayne State University.

Reference no: EM131810403

Questions Cloud

Assemble widgets has kept pace with inflation : The cost of machinery used to assemble widgets has kept pace with inflation. Using Exhibit 15.1, calculate the cost, in 2001 dollars
Find the expected cash balance at the end of april : Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). Calculate the expected cash balance at the end of April
Why would you make or buy plain cakes from nausori bakery : If you are the manager of Laucala branch, would you make or buy plain cakes from Nausori Bakery? Show all necessary calculations.
Determine the after-tax net present worth of assets : The company uses an after-tax MARR rate of 12% and is in the 35% tax bracket. Determine the after-tax net present worth of this asset over the 5-year service pe
Good investment on an after-tax basis : determine if this was a good investment on an after-tax basis. Contributed by Mukasa Ssemakula, Wayne State University.
What is the company contribution margin ratio : The company has no beginning or ending inventories and produced and sold 10,500 units during the month. What is the company's contribution margin ratio
Prepare a process costing departmental production report : Prepare a process costing departmental production report for the department using the weighted-average method. Round the cost per unit to the nearest cent.
Investor after-tax rate of return : Assuming MACRS depreciation and an income tax rate of 50%, determine the investor's after-tax rate of return on this investment.
Determine the present worth of the after-tax : If the facility opens in the month of March and sales are as shown, determine the present worth of the after-tax cash flows for the first 5 years

Reviews

Write a Review

Business Economics Questions & Answers

  Economists recommend that crime policy

Economists recommend that crime policy have the goal of minimizing the "costs of crime", which include the social costs of the crimes themselves and the social cost of enforcing the criminal law. What is the general rule for determining whether a par..

  What will be the equilibrium output of the industry

Consider a competitive industry with a large number of firms, all of which have identical cost functions c(y) = y^2+ 1 for y > 0 and c(0) = 0. Suppose that initially the demand curve for this industry is given by D(p) = 52 − p. What is the supply cur..

  Q1 clarify how do you find the changes in quantity demand

q1. clarify how do you find the changes in quantity demand changes in quantity supplied changes in demand as well as

  Consumption patterns change if the government taxed

The federal government currently taxes alcohol on the basis of the 100-proof gallon. (Alcohol that is 100 proof is 50 percent pure ethyl alcohol; whereas wine is usually about 24 proofs, and most beer is 6-10 proof.) How would alcohol consumption pat..

  Q1 describe how a developingemerging economy can benefit

q1. describe how a developingemerging economy can benefit from trade with a wealthy country even if it has no absolute

  Compute the point cost elasticity of demand

Compute the (point) cost elasticity of demand when cost is $700. Is demand elastic or inelastic.

  Estimated slope coefficient for a regression

What can be said about the estimated slope coefficient for a regression of Y on X, versus the estimated slope coefficient for a regression of X on Y.

  Using the demand and supply for money model

Using the demand and supply for money model, show what would happen to the price of bond and the interest rate for each of the following scenarios: a) The price level decreases b) The Federal Reserve decreases the money supply.

  What is the fair price of this investment

An investment pays $2,100 per year for the first 3 years, $4,200 per year for the next 8 years, and $6,300 per year the following 12 years (all payments are at the end of each year). If the discount rate is 8.75% compounding quarterly, what is the fa..

  Optimal number of trips to the bank using baumol-tobin model

Suppose the nominal interest rate is i = 10%, the time cost of a round trip to the bank is $25 and annual expenditure is $72,000. Calculate the optimal number of trips to the bank using the Baumol-Tobin model. How much is withdrawn in each trip?

  Draw the budget constraint facing any worker under

Second, it will not reduce bene ts for the rst $3,000 earned by the workers. After this, it will reduce bene ts at a reduction rate of 50%. Draw the budget constraint facing any worker under the proposed new program.

  What differences in behavior of the victims might you expect

An emissions fee is paid to the government, whereas an injurer, who issued and held liable, pays damages directly to the party harmed by an externality. What differences in the behavior of victims might you expect to arise under these two arrange..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd