Question
In: Finance
You have been asked by the president of your company to evaluate the proposed acquisition of...
You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck. The truck's basic price is $275,000, and it will cost another $25,000 to modify it for special use by your firm. The truck falls into the MACRS three-year class, and it will be sold after three years for
$50,000. Use of the truck will require an increase in net operating working capital
(spare parts inventory) of $25,000. The truck will have no effect on revenues, but it is expected to save the firm $125,000 per year in before-tax operating costs, mainly labor. The firm's cost of capital is 10% and the marginal tax rate is 35 percent. Should the company accept/reject the project?
NPV?
IRR?
MIRR?
Payback?
Decision?
Solutions
jeff jeffy answered 2 months agoRelated Solutions
You have been asked by the president of your company to evaluate the proposed acquisition of...
You have been asked by the president of your company to evaluate
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You have been asked by the president of your company to evaluate the proposed acquisition of...
You have been asked by the president of your company to evaluate
the proposed acquisition of a new special-purpose truck for
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You have been asked by the president of your company to evaluate the proposed acquisition of...
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the proposed acquisition of a new special-purpose truck for
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require an increase in NWC (spare parts inventory) of $1,400. The
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you have been asked by the president of your company to evaluate the proposed acquisition of...
you have been asked by the president of your company to evaluate
the proposed acquisition of a new special purpose truck for $70,000
, the truck fall into the MACES 3 year class and will be sold after
3 years for $19,900 use of the truck will require a increse in NWC
(spare parts inventory) of $1900 , the truck will have no effect on
revenues, but is expected to save the firm $23,700 per year in
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You have been asked by the president of your company to evaluate the proposed acquisition of...
You have been asked by the president of your company to evaluate
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the proposed acquisition of a new special-purpose truck for
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have no effect on revenues, but it is expected to save the firm
$86,000 per year in before-tax operating costs, mainly labor....
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