What is the total economic depreciation benefit

Reference no: EM131883505

Problem

Jim owns a lawn care service. He would like to obtain a new heavy duty trailer to haul his equipment and materials from job to job. He's found one that will suit his needs. The purchase price is $8,500. Jim is in a 28% tax bracket and sales taxes are 5%. The cost of capital for Jim to purchase the trailer is 8%. The trailer qualifies for 5 year MACRS depreciation method. Jim intends on using the equipment for 60 months. The salvage value of the trailer at the end of the use period is $4500. Jim has also found a dealer that is willing to lease the trailer to him for 60 months for $150 per month. The lease payments would be due at the beginning of the month.

What is the total economic depreciation benefit for all 5 years?

Reference no: EM131883505

Questions Cloud

Describe the types of health care technology : Provide and describe the types of health care technology available in foreign countries. This can include low-income, middle-income, and high-income economies.

What is the present worth of the fund : What is the present worth of the fund? What is the uniform series equivalent of the fund (uniform cash flow at end of years 1-6)?

Conditions for the successful planning of a school site : List and describe at least three important conditions for the successful planning of a school site.

Perform well in academics : The children from rural areas are unlikely to perform well in academics. Agree or Disagree? Justify your answer.

What is the total economic depreciation benefit : Jim owns a lawn care service. He would like to obtain a new heavy duty trailer. What is the total economic depreciation benefit for all 5 years?

Social media as tools in learning transfer : Provide at least three (3) learning innovations (i.e. technology application, social media as tools in learning transfer, and/or personal effective teaching met

How company handles employee performance interviews : When there is some sort of structure with reviews, it helps ensure that the topics that need to be addressed have been. Furthermore, any form of performance.

What is the book value at the end of year five : Jim owns a lawn care service. He would like to obtain a new heavy duty trailer to haul his equipment and materials. What is the Book Value at the end of year 5?

How is the dedication to customer and employees manifested : A southwest airline is an award-winning Flight Company distinguished from its competition by its dedication to its customer and employees.

User Account

All Pages