A cooperative has voted to purchase a box truck to move produce to their distribution center. The new truck will cost $29,000. The marginal tax rate is 21%, inflation is 3% and the required rate of return is 10% and the risk premium is 4%. The IRS is allowing straight-line depreciation over 15 years. The coop estimates that the truck can be sold for $7,400 after 8 years. What is the present value of after-tax terminal value after 8 years? $4,428 $4,896 $7,428 $7.495 None of the answers are correct.
A cooperative has voted to purchase a box truck to move produce to their distribution center. The new truck will cost $29,000. The marginal tax rate is 21%, inflation is 3% and the required rate of return is 10% and the risk premium is 4%. The IRS is allowing straight-line depreciation over 15 years. The coop estimates that the truck can be sold for $7,400 after 8 years. What is the present value of after-tax terminal value after 8 years? $4,428 $4,896 $7,428 $7.495 None of the answers are correct.
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
Problem 1PS
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A cooperative has voted to purchase a box truck to move produce to their distribution center. The new truck will cost $29,000. The marginal tax rate is 21%, inflation is 3% and the required rate of return is 10% and the risk premium is 4%. The IRS is allowing straight-line depreciation over 15 years. The coop estimates that the truck can be sold for $7,400 after 8 years. What is the present value of after-tax terminal value after 8 years?
$4,428
$4,896
$7,428
$7.495
None of the answers are correct.
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