What is the equipment''s after-tax net salvage value

Assignment Help Finance Basics
Reference no: EM131101186

Carter Air Lines is now in the terminal year of a project. The equipment originally cost $20 million, of which 80 percent has been depreciated. Carter can sell the used equipment today to another airline for $5 million, and its tax rate is 40 percent. What is the equipment's after-tax net salvage value?

Reference no: EM131101186

Questions Cloud

What is the project’s expected npv : Shao Industries is considering a proposed project for its capital budget. The company estimates that the project's NPV is $12 million. This estimate assumes that the economy and market conditions will be average over the next few years. What is the p..
Should the firm accept the project if total costs consisted : Should the firm accept the project? (Hint: The project is perpetuity so you must use the formula for perpetuity to find its NPV.) If total costs consisted of a fixed cost of $10,000 per year and variable costs of $95 per unit, and if only the variabl..
Should the spectrometer be purchased : The spectrometer would have no effect on revenues, but it is expected to save the firm $25,000 per year in before tax operating cost, mainly labor. The firm's marginal federal-plus-state tax rate is 40%. If the project's cost of capital is 10%, shoul..
What is the net cost of the machine for capital budgeting : What is the net cost of the machine for capital budgeting purposes? (That is, what is the Year 0 net cash flow?) What are the net operating cash flows in Years 1, 2, and 3? What is the terminal year cash flow? If the project's cost of capital is 12 ..
What is the equipment''s after-tax net salvage value : Carter Air Lines is now in the terminal year of a project. The equipment originally cost $20 million, of which 80 percent has been depreciated. Carter can sell the used equipment today to another airline for $5 million, and its tax rate is 40 percent..
What is the project''s initial investment outlay : Johnson Industries is considering an expansion project. The necessary equipment could be purchased for $9 million, and the project would also require an initial $3 million investment in net operating working capital. The company's tax rate is 40 perc..
Why is it true, in general, that a failure to adjust : Why is it true, in general, that a failure to adjust expected cash flows for expected inflation biases the calculated NPV downward?
What is the basis for this emphasis on cash flows : Operating cash flows, rather than accounting profits, are listed in Table 11-4.What is the basis for this emphasis on cash flows as opposed to net income?
Define cash flow accounting income : Define each of the following terms: a. Cash flow; accounting income b. Incremental cash flow; sunk cost; opportunity cost c. Net operating working capital changes; salvage value d. Real rate of return, rr, versus nominal rate of return

Reviews

Write a Review

Finance Basics Questions & Answers

  What can infer about expected change in the exchange rate

You read in a newspaper that the nominal interest rate is 12 percent per year in Canada and 8 percent per year in the United States. Suppose that the real interest rates are equalized in the two countries and that purchasing-power parity holds.

  Summer tyme inc has cash available and is considering a new

summer tyme inc. has cash available and is considering a new three-year expansion project that requires an initial

  The ceo of digital storage devices has been granted options

Walter Maxim, the CEO of Digital Storage Devices has been granted options on 300,000 shares. The stock is currently trading at $27 a share and the options are at the money. The volatility of the stock has been about .15 on an annual basis over the la..

  Explain the characteristics of statistics what are the

q1. a. explain the characteristics of statistics.b. what are the components of statistics? give a brief description of

  The process that begins with recording business

the first step of the accounting cycle is toa. record journal entries.nbspnbspnbspnbspnbspnbspnbspnbspnbspnbspnbsp b.

  Computation of ytm as well as current yield

Computation of YTM as well as current yield and Brown Enterprises' bonds currently sell for $1,025

  Describe the elements of the fraud triangle

Describe the elements of the fraud triangle

  Determining profit or loss from an investment

Three years ago, you purchased 150 shares of IBM stock for $88 a share. Today, you sold your IBM stock for $103 a share. For this problem, ignore commissions that would be charged to buy and sell your IBM shares.

  When a business is deciding to buy from suppliers how

when a business is deciding to buy from suppliers how important is price in their decision process? are there

  What is the yield on 3-year tresasury securities

The real risk-free rate is 3%. Inflation is expected to be 2% this year and 4% the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Tresasury securities?

  Pizza express enterprises has a target capital structure of

pizza express enterprises has a target capital structure of 50 debt and 50 ordinary equity. the firm is considering a

  What would be the percentage change in the price

Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has three years to maturity, whereas Bond Dave has 20 years to maturity.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd