Details of this Paper

solving this problem

Description

solution


Question

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

Price : $37
SiteLock