What is the incremental annual cash flow for year

Assignment Help Financial Management

Reference no: EM13924948

Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $31,000. The equipment has a 4-year life. The company expects to sell the equipment at the end of year 4 for $7,000. The firm uses MACRS depreciation which allows for 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percent depreciation over years 1 to 4, respectively. The equipment can be leased for $9,000 a year. The firm can borrow money at 7 percent and has a 34 percent tax rate. What is the incremental annual cash flow for year 4 if the company decides to lease the equipment rather than purchase it?

Reference no: EM13924948

Questions Cloud

Firm has market value equal to its book value : A firm has a market value equal to its book value. Currently, the firm has excess cash of $600 and other assets of $5,400. Equity is worth $6,000. The firm has 500 shares of stock outstanding and net income of $1,035. What will the new earnings per s..

Which of pep boys current assets had the largest balance : Which of Pep Boys current assets had the largest balance?

Measure the performance of the case-study : Literature review; to define the criteria required to measure performance of the case- study and identifying the case-study , introducing the case-study and find relevant information.

Focus of the article applied eugenics : The main focus of the article Applied Eugenics, written by P. Popenoe and R.H. Johnson, is that it would be detrimental to the American gene pool to allow foreigners to immigrate to Unites States soil.

What is the incremental annual cash flow for year : Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $31,000. The equipment has a 4-year life. The company expects to sell the equipment at the end of year 4 for $7,000. What is the incremental annual cash f..

The civil rights act of 1964 : Determine which class protected by Title VII of the Civil Rights Act of 1964 had the greatest impact on the workforce of the 20th century. Next, determine which class might have the greatest impact on the workforce of the 21st century. Support you..

What is the optimal capital budget : Using the data in the question for Milwaukee Surgical Supplies, what if the company adjusts by three percentage points for both low and high risk projects and the projects are classified as follows, Project A has high risk, Project B has high risk, P..

Crito by plato : In Crito, by Plato, the reader is invited to understand the arguments and counterarguments employed by Socrates' dear friend Crito while attempting to convince Socrates to escape his death sentence.

Underage teenage kid violators : In a list you make in your report specifically identify the status offense laws that are being violated by each of the underage teenage violators. Identify how you are going to process at the scene each of the underage teenage kid violators, then ..

User Account

All Pages