sideout
27-03-2005, 11:37 AM
I know this is my first post, but I need help for a college class. The main problem I am having is figuring out question A and B. Here is the problem:
You are considering a light truck to service a new customer. It will cost $35,000 and produce increased revenues of 20,000 per year. Annual maintenance and associated operating costs are 7,500. Life of the new customer contract is 5 years and the salvage value for the truck is estimated at $5,000. The state corporate tax rate is 7% and the marginal federal rate is 30%. The MARR is 12%. Do your recommend this investment?
A) What tax rate will you use and explain how you developed it.
B) Indicate the depreciation schedule you selected and why.
C) Use after tax analysis to determine the Present Worth or value of this business opportunity.
D) Solve this problem by using IRR
Any help would be GREATLY appreciated.
You are considering a light truck to service a new customer. It will cost $35,000 and produce increased revenues of 20,000 per year. Annual maintenance and associated operating costs are 7,500. Life of the new customer contract is 5 years and the salvage value for the truck is estimated at $5,000. The state corporate tax rate is 7% and the marginal federal rate is 30%. The MARR is 12%. Do your recommend this investment?
A) What tax rate will you use and explain how you developed it.
B) Indicate the depreciation schedule you selected and why.
C) Use after tax analysis to determine the Present Worth or value of this business opportunity.
D) Solve this problem by using IRR
Any help would be GREATLY appreciated.