User Account

All Pages

Should dropit fast replace the equipment-car

Assignment Help Accounting Basics
Reference no: EM133068510

Question - Dropit Fast is considering purchasing some new equipment to replace existing equipment (i.e. delivery car) that has a book value of zero, but market value of $15,000.

The new equipment costs $90,000 and is expected to provide production savings and increased profits of $20,000 per year for the next ten years.

The new equipment has an expected useful life of ten years, after which the estimated salvage value would be $10,000.

Asuming straight-line depreciation, a 34% effective tax rate, and a cost of capital (i.e. discount rate) of 12%, should DropIt Fast replace the equipment/car? Explain with full explanations.

Reference no: EM133068510

Questions Cloud

Focus on the concept of false discovery : This week we focus on the concept of false discovery in data. After reviewing the article by Naouma (2019), answer the following questions:
What compound annual rate return must you earn : If you wish to purchase a $107,450 boat to celebrate your 30th birthday, what compound annual rate return must you earn
Equity from the sale of new common stock : What is the Adjusted Net Present Value (ANPV) criterion for deciding whether to go ahead with a project? What is the Weighted Average Cost of Capital (WACC) alt
What is the average duration of all the assets : The following balance sheet information is available (amounts in thousands of dollars and duration in years) for a financial institution:
Should dropit fast replace the equipment-car : Asuming straight-line depreciation, a 34% effective tax rate, and a cost of capital (i.e. discount rate) of 12%, should DropIt Fast replace the equipment/car
What is the cost of internal common equity : What is the cost of internal common equity if the long-term growth of dividends is projected to be 4% indefinitely (round your answer to two decimal places)?
What is company wacc : A company's capital structure consists of 40% debt and 60% equity. The before-tax cost of debt is 8.125%, the cost of retained earnings is 12%, and the tax rate
Record the sale under two different assumptions : Record the sale under two different assumptions: (a) the shares sold for $46,400, and (b) the shares sold for $43,100
What is relevant cost of debt financing : If the firm's tax rate is 40%, what is relevant cost of debt financing to this company (round your answer to two decimal places)?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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