Lane construction ltd is considering the acquisition of a

Reference no: EM13387278

Sensitivity Analysis: using excel

Lane Construction ltd. is considering the acquisition of a new eighteen wheeler.

-The truck base price is $80,000 and it will cost another $20,000 to modify it for special use by the company.

-This truck falls into MACRS five year class. It will be sold after three years for $30,000.

-The truck purchase will have no effect on revenues, but it is expected to save the firm $45,000 per year in before-tax operating costs, mainly in leasing expenses.

-The firm marginal tax rate (federal plus state) is 40%, and its MARR is 15%.

(a) Is this project acceptable, based on the most likely estimates given in the problem?

(b)If the firm's MARR is increased to 25%, what would be the required savings in leasing so that the project would remain profitable?

Reference no: EM13387278

Questions Cloud

Which of the following is a characteristic of the efficient : which of the following is a characteristic of an efficient market?a. small number of individuals.b.

Define the difference between simple and complex : imagine that you are a nutritionist and responsible for educating your customers on the importance of eating health.

Triumph company has total assets worth 6413228 next year it : 1.planning models that are more sophisticated than the percent of sales method have2.firms that achieve higher growth

Based on the following when will more principle than : q1 if a lender requires a dcr of 1.20 a maximum ltv of 70 percent amortized over 25 years with an interest rate of 6

Lane construction ltd is considering the acquisition of a : sensitivity analysis using excellane construction ltd. is considering the acquisition of a new eighteen wheeler.-the

Explain the organizational structure of your chosen : writea 1050- to 1400-word paper in which you select an organization with which you are familiar and present the

We would expect that all else being equal investors would : 1. we would expect that all else being equal investors would pay less for a stock that they view as having become more

There can be a good strategy with a bad product and a good : there can be a good strategy with a bad product and a good product with a bad strategy and this can impact product or

Mke a classified balance sheet with proper heading on a : the following given in scrambled order are accounts and balances from the accounting records of alleg inc. as of

User Account

All Pages