Reference no: EM131482870
Your company is considering buying some heavy duty trucks in order to transport heavy equipment and gain more business. Each truck costs $55,000 and your company needs 8 trucks. The dealership will deliver all 8 trucks to your site for $1,000.
Your company thinks that these trucks should be good for 5 years and the salvage value at the end of year 5 will be about $10,000 for each truck. The net working capital change associated with this purchase will be $12,000 in total and it will be recovered at the end of year 5.
After purchasing the trucks, your company projects the gross profits to increase by $180,000 for the first three years, and $150,000 for the rest of the two years.
These trucks qualify as MACRS 5-year property. The depreciation rates are shown below:
MACRS Year Percentage
1 14.29%
2 24.49%
3 17.49%
4 12.49%
5 8.93%
Your company's marginal tax rate is 33%. The appropriate discount rate for your company is 10%.
Should your company buy these trucks? Show the capital budgeting process (Projecting cash flow, Calculating NPV and IRR, and your decision.)
|
Compare and contrast the of theories of goal setting
: Compare and contrast the significant similarities and differences among the theories of goal setting, self-efficacy, and reinforcement.
|
|
Describe the case of adam smith
: Adam Smith, in his famous book The Wealth of Nations, noted, "Every individual neither intends to promote the public interest, nor knows how much.
|
|
Establish the correct macro-hedge
: Should the bank go short or long on the futures contracts to establish the correct macro- hedge?
|
|
Describe the iterative-incremental development model
: Describe the iterative/incremental development model. Discuss when it is appropriate to use the waterfall or iterative/incremental development model.
|
|
Should your company buy these trucks
: Should your company buy these trucks? Show the capital budgeting process (Projecting cash flow, Calculating NPV and IRR, and your decision.)
|
|
Does this affect the effort they expend on teaching
: When professors get tenure, essentially guaranteeing them lifetime jobs, does this affect the effort they expend on teaching and research? What concept might.
|
|
What is the purpose of a warranty given by a used-car dealer
: What is the purpose of a warranty given by a used-car dealer? Evaluate one used-car warranty that gives your money back if not satisfied in a certain time.
|
|
Formula for the fcf calculation
: Can you full explain and use this formula for the FCF calculation: FCF=[ (Revenue-Op Ex -D&A)*(1-tc) +D&A -Cap Exp -Add WC
|
|
Does the deadline have anything to do with adverse selection
: In 2006 Medicare recipients were permitted to sign up for a federally subsidized drug benefit plan. The sign-up phase had a May 15th deadline.
|