A tractor for over-the-road hauling is to be purchased by AgriGrow for $78,000. It is expected...

A tractor for over-the-road hauling is to be purchased by AgriGrow for $78,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,200. Transportation cost savings are expected to be $130,000 per year; however, the cost of drivers is expected to be $50,000 per year, and operating expenses are expected to be $35,000 per year, including fuel, maintenance, insurance, and the like. The company’s marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that, to AgriGrow’s surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,200. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years.

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After Tax Cash Flow

After Tax PW, AW, IRR and ERR

jeff jeffy answered 1 year ago

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