Baghiben Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-depreciated vans, which you think you can sell for $3,700 a piece and which you could probably use for another 2 years if you chosenot to replace them. The NV vans will cost $36,000 each in the configuration you want them, and can be depreciated using MACRSover a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-taxcash savings due to acquiring the new vans amounts to about $4,400 each. If your cost of capital is 12 percent and your firm faces a 21percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)YearFCF0123456

1. Initial Cash Flow (Year 0): - Initial investment for 5 vans at $36,000 each: ( 5 times…

Answered: Your company is contemplating replacing…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully- depreciated vans, which you think you can sell for $3,100 a piece and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $30,000 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $3,800 each. If your cost of capital is 10 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.) FCF Year 1 6
Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing five fully-depreciated vans, which you think you can sell for $3,000 each and which you could probably use for another 2 years if you chose not to replace them. The NV vans will cost $29,850 each in the configuration you want them, and can be depreciated using MACRS over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax cash savings due to acquiring the new vans amounts to about $3,700 each. If your cost of capital is 8 percent and your firm faces a 21 percent tax rate, what will the cash flows for this project be? 5 Year MACRS: year 1= 20%, year 2 = 32%, year 3 = 19.2%, year 4 = 11.52%, year 5 = 11.52%, year 6 = 5.76% Ive figured years 0-5 correctly as shown in the screenshots, but the same formula does not work for year 6.
Your boss asks you to evaluate the purchase of a new battery-operated toaster for his restaurant chain. The toaster [ BT ] costs $22 per unit, and has an estimated useful life of four years. The toaster requires batteries once a week yielding an annual operating cost of $96 per year; salvage value of both toaster and batteries is $12. The alternative is to purchase an electric toaster [ ET ] that will last seven years and costs $150. The estimated annual electric bill for this toaster is $60, and it has an expected salvage value of $15. The company anticipates purchase of 10000 toasters for eternity. Assume a tax rate of 38% and a WACC of 13%. If toaster BT's annual battery costs decrease by $4 and ET's toaster cost decrease by $4 which toaster would you recommend now? a. BT: AEC $61.39 b. BT: AEC $60.81 c. ET: AEC $60.81 d. ET: AEC $61.39 e. none of them
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $113,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 5-year economic lives. Once the drones' economic life is over, they would all be sold for $8,500 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: • Amazon expects $9,200 in annual operating costs. • All future cash flows are year-end cash flows. ● Amazon pays 25 percent tax rate on all taxable income. Amazon requires an annual discount rate of 9 percent, and the rate is not…
Your company is trying to decide whether it should purchase a copier from Xerox or lease it. The copier has an expected life of 6 years, after which it has only marginal value (you can ignore any residual value). If you purchase it, the price is $145,000, payable now, and you would have to pay an annual service charge of $8,000. If you lease it, you would have an annual payment of $36,000 each year (for 6 years), which includes service. The lease payment and the annual service charge occur at the beginning of each year. The interest rate is 3.8%. Which option is least costly?
Suppose that you have an old car that is a real gas guzzler. It is 10 years old and could be sold to a local dealer for $400 cash. The annual maintenance costs will average $800 per year into the foreseeable future, and the car averages only 10 miles per gallon. Gasoline costs $3.50 per gallon, and you drive 15,000 miles per year. You now have an opportunity to replace the old car with a better one that costs $8,000. If you buy it, you will pay cash. Because of a two-year warranty, the maintenance costs are expected to be negligible. This car averages 30 miles per gallon. Should you keep the old car or replace it? Utilize a two-year comparison period and assume that the new car can be sold for $5,000 at the end of year two. Ignore the effect of income taxes and let your MARR be 15%. State any other assumptions you make.
Please answer fast i give you upvote.
Carla Vista Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company’s current truck (not the least of which is that it runs). The new truck would cost $56,760. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,600. At the end of 8 years, the company will sell the truck for an estimated $28,600. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset’s estimated useful life. Larry Newton, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company’s cost of capital is 8%.
Godo
Amazon is considering using high capacity drones that would make its product deliveries more efficient. For this project, $140,000 would need to be spent right away to buy the required fleet of drones. The drones will be losing their economic value in equal amount each year, fully over their 5-year economic lives. Once the drones' economic life is over, they would all be sold for $10,300 selling price to a new owner, and Amazon would then immediately purchase the same but brand-new drones for the same price as what it paid for the initial fleet of drones. When those drones' life is over, they would again be sold and, again, brand-new ones would be purchased - all for the same prices as for the initial drones, and so on, over and over. Additional information: • Amazon expects $10,100 in annual operating costs. . All future cash flows are year-end cash flows. • Amazon pays 24 percent tax rate on all taxable income. • Amazon requires an annual discount rate of 10 percent, and the rate is…
Linkin Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $ 55,040. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $ 8,600. At the end of 8 years, the company will sell the truck for an estimated $ 28,900. Traditionally the company has used a rule of thumb that a proposal should not be accepted unless it has a payback period that is less than 50% of the asset's estimated useful life. Larry Newton, a new manager, has suggested that the company should not rely solely on the payback approach, but should also employ the net present value method when evaluating new projects. The company's cost of capital is 8%. Click here to view the factor table. (a) Compute the cash payback period and net present value of the proposed investment. (If the net present value…
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion xA, which will cost $13,000 to purchase and which will

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