HaulCo is considering the purchase of a truck. Over its five year life, it will provide net revenues of $15,000 per year at an initial cost of $65,000 and a salvage value of $20,000. HaulCo pays 35% in taxes, the CCA rate for trucks is 30%, and the after tax MARR is 12%. (a) What is the after tax annual cost or worth of this purchase? (b) Should HaulCo pursue this project?

HaulCo is considering the purchase of a truck. Over its five year life, it will provide net revenues of $15,000 per year at an initial cost of $65,000 and a salvage value of $20,000. HaulCo pays 35% in taxes, the CCA rate for trucks is 30%, and the after tax MARR is 12%. (a) What is the after tax annual cost or worth of this purchase? (b) Should HaulCo pursue this project?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 2P

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