What is the cost basis for the warehouse

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1. Your firm is trying to make a decision to buy or lease a light-truck. The light-truck can be purchased for $35,000 and your firm as a marginal alternative rate of return equal to 7%. The dealer will lease the same truck for five years at $10,000 per year. Your chief financial officer leaves the firm will have a net profit of $200,000 per year for the foreseeable future. Considering tax and depreciation affects, calculate whether or lease or purchase is the better deal.

2. In Fairbanks, the Alyeska pipeline service Co. purchased 160 acre homestead from pioneer for $1000 an acre and 250,000 for the cabin and garage. A cabin and garage were preserved as an historical property for an additional $80,000 and moved off-site. After removing 10,000 yards of gravel, Alyeska pipeline service Co. erected fencing and a repair workshop for an additional $350,000. For depreciation purposes what is the cost basis for the warehouse?

3. Your engineering company just signed a three year deal to provide services to the State of Alaska; however, you must purchase the same CAD software and equipment to match their system. All total you calculate $200,000 which includes training and your accountant believes it will have a 5 year useful life. At the end of the 3 years you hope to sell the CAD system for $70,000. If the annual licensing fee and computer upgrades are expected to be an additional $65,000 per year, what is the EUAC if the effective income tax rate is 40% and the company's MARR is 12%?

Reference no: EM13198884

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