Bobby Jones, the club pro at Pebble Beach Golf Club, is considering replacing his fleet of golf carts. He bought the existing fleet of 100 EZ-GO carts two years ago for $2,000 per cart. He is considering replacing them with a new model Club Car. Each Club Car has a GPS, a cooler, and a ball/club cleaner. Each Club Car costs $3,000. The carts are in Class 43 with a 30% depreciation rate. If he sold the EZ-GO carts today he could get $750 for each cart. One advantage of buying the new carts is that they are more durable and so Bobby can carry a smaller inventory of spare parts. Bobby figures his inventory will drop by $25,000. If Bobby goes ahead with the golf cart replacement, what are the initial cash flows? Assume a tax rate of 35%. (Round your answer to the nearest dollar.)
Bobby Jones, the club pro at Pebble Beach Golf Club, is considering replacing his fleet of golf carts. He bought the existing fleet of 100 EZ-GO carts two years ago for $2,000 per cart. He is considering replacing them with a new model Club Car. Each Club Car has a GPS, a cooler, and a ball/club cleaner. Each Club Car costs $3,000. The carts are in Class 43 with a 30% depreciation rate. If he sold the EZ-GO carts today he could get $750 for each cart. One advantage of buying the new carts is that they are more durable and so Bobby can carry a smaller inventory of spare parts. Bobby figures his inventory will drop by $25,000. If Bobby goes ahead with the golf cart replacement, what are the initial cash flows? Assume a tax rate of 35%. (Round your answer to the nearest dollar.)
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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Transcribed Image Text:Bobby Jones, the club pro at Pebble Beach Golf Club, is considering replacing his fleet of golf carts. He bought the existing fleet of 100 EZ-GO carts two years ago for $2,000 per cart. He is considering replacing them with a new model Club Car. Each Club Car has a
GPS, a cooler, and a ball/club cleaner. Each Club Car costs $3,000. The carts are in Class 43 with a 30% depreciation rate. If he sold the EZ-GO carts today he could get $750 for each cart. One advantage of buying the new carts is that they are more durable and so
Bobby can carry a smaller inventory of spare parts. Bobby figures his inventory will drop by $25,000. If Bobby goes ahead with the golf cart replacement, what are the initial cash flows? Assume a tax rate of 35%. (Round your answer to the nearest dollar.)
$184600 X
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