What is the maximum purchase price the company can pay

Reference no: EM13224780

A company is considering the purchase of tractor units that will yield benefits of $10,000 for year 1, $15,000 for year 2, $20,000 for year 3, $20,000 for year 4, and $20,000 for year 5. The depreciation system used by company is MACRS-GDS, and the effective tax rate is 34%. The company believes that the tractor units can be sold at the end of five years of use for 25% of the original purchase price. What is the maximum purchase price the company can pay for the tractor if it's after tax MARR is 12% per year?

Reference no: EM13224780

Questions Cloud

Compute the weight of potassium chlorate : Calculate the weight of potassium chlorate required to prepare 380 mL of wet oxygen collected over water at 20 Celcius and 750 mm of Hg.

What are the two reasons people wish to hold money : Suppose Aunt Sophie transfers $1,000 to her savings account from her checking account. What happens to the value of M1 and to M2 Suppose Uncle Nacho sells shares of Time Warner stock for $20,000 and puts the proceeds from the sale

Compute the molecular weight of a gaseous : Calculate the molecular weight of a gaseous compound if 0.75 gram occupies a volume of 336 mL at STP

State equilibrium the mixture contains a high concentration : values for an equlibruim constant suggests that at equilibrium the mixture contains a high concentration of products?

What is the maximum purchase price the company can pay : A company is considering the purchase of tractor units that will yield benefits of $10,000 for year 1, $15,000 for year 2, $20,000 for year 3, $20,000 for year 4, and $20,000 for year 5. The depreciation system used by company is MACRS-GDS, and th..

Explain the initial concentration of the reactant : A chemical reaction that is first order with respect to the reactant is observed to have a rate constant of 1.2 x 10^-2s^-1. If the initial concentration of this reactant is 2.0 M, what is the concentration after 200s?

Which pizza-baking oven would you select and why : Mamma Mia's Pizza must replace its current pizza-baking oven. The two best alternatives are Crispy Cruster and Easy Baker. Assume an income tax rate of 50% and MARR after-taxes of 10% per year. Which pizza-baking oven would you select and why

Discuss the impact of the internet on the five stages : Discuss the impact of the internet on the five stages of the CDM process. What happens differently, or how does the internet use these processes to sell more efficiently?

Do the actions change depending on the industry : Discuss actions you could take to bring more players into an existing strategic "game."

User Account

All Pages