As the director of a construction firm, you are considering buying a new cement mixing truck for $103, 000. At the end of its useful life of 5 years, you expect to be able to sell it for $4, 300. the mixing truck is expected to have annual operating and maintenance expenses of $2, 300 Your cement-mixing truck is expected to depreciate for tax purposes at a declining balance rate of 25%. The corporate income tax rate is 30%. Your company’s WACC is 11%. Assume the asset pool remains open after selling the item. Calculate the equivalent annual after-tax cost., the half-year rule should be used where applicable. Round your answer to the nearest dollar

As the director of a construction firm, you are considering buying a new cement mixing truck for $103, 000. At the end of its useful life of 5 years, you expect to be able to sell it for $4, 300. the mixing truck is expected to have annual operating and maintenance expenses of $2, 300 Your cement-mixing truck is expected to depreciate for tax purposes at a declining balance rate of 25%. The corporate income tax rate is 30%. Your company’s WACC is 11%. Assume the asset pool remains open after selling the item. Calculate the equivalent annual after-tax cost., the half-year rule should be used where applicable. Round your answer to the nearest dollar

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 4P

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