Bob is considering buying a new farming tractor for his farm. He has a choice between a John-Deere-XP tractor and a Sunflower-FT tractor. Bob has a MARR of 6%. John-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value at the end of 10 years. Annual Expense (maintenance, charging, etc.): $3,000. Sunflower-FT First Cost: $200,000. Life: 15 years, zero salvage value at the end of 15 years. Annual Expense (maintenance, charging, etc.): $3,500. For a 10-year study period, what salvage value for the extra 5 years of life for Sunflower-FT would result in that both tractors are equivalent in Present Worth? $96,133.6 $87,734.1 $105.266,

Bob is considering buying a new farming tractor for his farm. He has a choice between a John-Deere-XP tractor and a Sunflower-FT tractor. Bob has a MARR of 6%. John-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value at the end of 10 years. Annual Expense (maintenance, charging, etc.): $3,000. Sunflower-FT First Cost: $200,000. Life: 15 years, zero salvage value at the end of 15 years. Annual Expense (maintenance, charging, etc.): $3,500. For a 10-year study period, what salvage value for the extra 5 years of life for Sunflower-FT would result in that both tractors are equivalent in Present Worth? $96,133.6 $87,734.1 $105.266,

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter5: Business Deductions

Section: Chapter Questions

Problem 45P

See similar textbooks

Similar questions

Scenario: You purchase... 10 acres of bare ground in an area zoned commercial/office. Streets and utilities are in the street. The price paid is $6 per square foot. Holding time: 5 years. If you want a: (a)15% annual return on your land, what will you have to sell the land for in 5 years? (Per square foot, not including any costs) (b) for a 15% total return? (per square foot, not including any costs)
A farmer is about to make a lease or buy decision about a tractor. The tractor is financed at an interest rate of 8% for seven years, with an annual payment of $10 564. The cash flows of both options for seven years and the factors taken into consideration are summarized in the table below. Also, it is assumed that there are no repair costs associated with leasing the equipment. (a) Using net present value of cost, determine the best approach for the farmer. Purchase (b) Explain why fuel cost is not included in the comparison.
Farmer Smith has some ranch land. He can buy a heard of young steers for $10,000, graze them on his ranch, and sell them after 3 years for $40,000. He can then immediately buy another herd of young steers, graze them for 3 years, etc. Assume r=10%. What is the value of the land as a cattle ranch? (Choose the closest answer.) $8,063 $80,630 O $30,000 O $20,050
We purchase a new machine for $50,000 and it costs $2,500 to install. If we are in the MACRS 5 year class, what is the cost basis after two years? O a. $36,750 O b. $23,625 O c. $22,500 Od. $35,000
Which one should you choose?
Sooky has a spotter truck with a book value of $57,000 and a remaining useful Ilfe of five years. At the end of the five years the spotte purchase a new spotter truck for $137,000 and receive $32,700 in return for tradlng in Its old spotter truck. The old spotter truck has The new spotter truck will reduce varlable manufacturing costs by $26,700 per year over the five-year Iife of the new spotter truck. replacing the current spotter truck with the new truck is: Multiple Cholce $29,200 decrease $29,200 increase $32,700 increase $137,000 decrease $32,700 decrease
Help
Your company decided to offer product delivery service and would need a truck for the delivery. You are evaluating the following two options. Option 1: Your company can lease a truck at a pretax cost of $27,000 per year. Option 2: Your company can buy a truck at a cost of $84,000, with annual pretax maintenance expenses of $14,000. The truck will depreciate to zero on a straight-line basis. The truck has a 4 years life and will have a salvage value of $18,000 at the end of its life. If the tax rate is 35% and the discount rate is 10%, which option would you prefer? (Hint: compute the equivalent annual cost (EAC).)
am. 111.
Baghiben
A firm is considering leasing or buying a mower. The mower costs $1000 and can be depreciated and falls into the MACRS 3 year class (33%; 45%; 15% and 7%). A maintenance contract will be purchased for $200 per year payable at the start of each year for 4 years. The firms tax rate is 30%. The firm expects to sell the mower for $96 at the end of the 3rd year. What is the net sale price when the mower is sold?
A land surveyor just starting in private practice needs a van to carry crew and equipment. He can lease a used van for $8000 per year, paid at the beginning of each year, in which case maintenance is provided. Alternatively, he can buy a used van for $16,000 and pay for maintenance himself. He expects to keep the van for 3 years, at which time he would sell it for an anticipated $3500. Given a MARR of 6%, what is the most the surveyor should pay for uniform annual maintenance to make it worthwhile to buy the van instead of leasing it?