12- Florida Construction Equipment Rentals (FCER) purchases a new 10,000-pound-rated crane for rental to its customers. 14 This crane costs $1,125,000 and is expected to last for 25 years, at which time it will have an expected salvage value of A $147,000. FCER earns S195,000 before-tax cash flow each year in rental income from this crane, and its total taxable income each year is between $10M and $15M. If FCER uses straight-line depreciation and a MARR of 15%, what is the present worth of the after-tax cash flow for this equipment? Should the company invest in this crane? Contributed A by Paul R. McCright, Untversity of South Florida
12- Florida Construction Equipment Rentals (FCER) purchases a new 10,000-pound-rated crane for rental to its customers. 14 This crane costs $1,125,000 and is expected to last for 25 years, at which time it will have an expected salvage value of A $147,000. FCER earns S195,000 before-tax cash flow each year in rental income from this crane, and its total taxable income each year is between $10M and $15M. If FCER uses straight-line depreciation and a MARR of 15%, what is the present worth of the after-tax cash flow for this equipment? Should the company invest in this crane? Contributed A by Paul R. McCright, Untversity of South Florida
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:12- Florida Construction Equipment Rentals (FCER) purchases a new 10,000-pound-rated crane for rental to its customers.
14 This crane costs $1,125,000 and is expected to last for 25 years, at which time it will have an expected salvage value of
A $147,000. FCER earns $195,000 before-tax cash flow each year in rental income from this crane, and its total taxable
income each year is between $10M and $15M. If FCER uses straight-line depreciation and a MARR of 15%, what is
the present worth of the after-tax cash flow for this equipment? Should the company invest in this crane? Contributed
by Paul R. McCright, Untversity of South Florida
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