The firm purchases a vehicle with equity capital only, no debt. The purpose of the vehicle is to operate a taxi service for one year. This is the problem as we worked in class, but now the life of the vehicle is only one year, after which time the vehicle is worthless. Also some of the other values are different. The firm is contemplating the following: Vehicle acquisition cost $ 30,000 Years of useful life (economic life) 1 Tax rate 0% Required rate of return on equity 10% Annual revenues $ 145,000 Operating expenses (excluding depreciation) $ 100,000 What's the P&L?
The firm purchases a vehicle with equity capital only, no debt. The purpose of the vehicle is to operate a taxi service for one year. This is the problem as we worked in class, but now the life of the vehicle is only one year, after which time the vehicle is worthless. Also some of the other values are different.
The firm is contemplating the following:
Vehicle acquisition cost $ 30,000
Years of useful life (economic life) 1
Tax rate 0%
Required rate of
Annual revenues $ 145,000
Operating expenses (excluding
What's the P&L?
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