Main Content Net Revenue Years 1 Investment You are thinking about buying a new Hot Dog cart for $7,760. Based on what the manufacturer tells you about maintenance costs and your estimate of revenues you should be able to make around $13,700 per year, for the next 7 years. Market value for the cart at that time should be about $450. According to the current asset class table the allowable depreciation rate for Hot Dog carts is 27%. If your business' tax rate is 49% and your after-tax MARR is 5%, what is the after tax annual worth of this investment? Use four decimal place accuracy for the CTF and CSF.

Main Content Net Revenue Years 1 Investment You are thinking about buying a new Hot Dog cart for $7,760. Based on what the manufacturer tells you about maintenance costs and your estimate of revenues you should be able to make around $13,700 per year, for the next 7 years. Market value for the cart at that time should be about $450. According to the current asset class table the allowable depreciation rate for Hot Dog carts is 27%. If your business' tax rate is 49% and your after-tax MARR is 5%, what is the after tax annual worth of this investment? Use four decimal place accuracy for the CTF and CSF.

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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QUESTION 3 You are considering starting a new factory producing small electric heaters. Each unit will sell at a price of $55. The production cost of each heater is $35. You are expecting to sell 9000 units per year. This project has an economic life of 6 years. The project requires an investment of $700000 in plants and equipment. This equipment will be depreciated to zero salvage value based on 5-year MACRS schedule. The depreciation rates from year 1 to 6 are 20 % ,32 %, 19.2 %, 11.52 %, 11.52 %, and 5.76 percent, respectively. The company will sell its old equipment for $100,000. The old machine is fully depreciated. The required rate of return for the project is 12 percent, the working capital requirement is 10 percent of the next year's sales revenue. The marginal corporate tax rate is 20 percent. At the termination of the project, the plant and equipment will be sold for an estimated value of $50000. Based on these assumptions, estimate the cash flow for capital expenditures.…
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Help Save & Exit Subm 16 Assume that a company is considering purchasing a machine for $50,000 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. What is the net present value of this investment? Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table. Multiple Choice $3,159 О $3,896 О О $3,796 $3,359
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