Question;Your company is considering the purchase of a fleet of energy efficient hybrid delivery trucks. The trucks will require a total investment of $1 million. Their expected useful life is five years, at which time they will be sold for 10% of original cost. For tax purposes, the trucks will be depreciated using MACRS, and are classified as 5-year property. The investment will have no effect on net working capital. If the trucks will reduce your company?s annual expense by $325,000, should you buy these trucks? Your company?s cost of capital is 14%, and its tax rate is 35%.
Paper#48250 | Written in 18-Jul-2015Price : $22