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I am having difficulty solving this problem.;Bar T Ranches, Inc. is considering buying a new helicopter for \$350,000. The company's old helicopter has a book value of \$85,000, but will only bring \$60,000 if it is sold. The old helicopter can be depreciated at the rate of \$13,500 per year for the next four years. The new helicopter can be depreciated using the 5-year MARCS schedule. The new helicopter is expected to save \$62,000 after taxes through reduced fuel and maintenance expenses. Bar T Ranches is in the 34% tax bracket and has a 12% cost of capital.;a. What is the cash inflow from selling the old helicopter?;b. What is the net cost of the new helicopter?;c. Calculate the incremental depreciation of the new helicopter;d. Calculate the net cash flows for the purchase;e. Calculate the net present value of the helicopter purchase and state whether or not the firm should buy it

Paper#25935 | Written in 18-Jul-2015

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