Taxation - opportunity cost of capital and tax rate given, Taxation

BBQ Beach corporation manufactures inflatable air-matresses and life jackets for summer fun. the firm is considering replacement of their existing production line (CCA Class 8, d=20%) to reduce operating costs by $200,000 annually. Revenues are expected to rise by $100,000 per year, which will increase accounts receivable which are 15% of revenues. The new purchase line will cost $900,000 and will have a salvage value of $240,000 in seven years, when the company will reassess the viability of the business. The old equipment is worth $70,000 today and will be worth nothing in seven years.

If BBQ Beach has a tax rate, t=35%, and its opportunity cost of capital is 12%, then should the company replace the equipment? please draw a timeline.

Posted Date: 7/29/2012 1:55:35 PM | Location : United States







Related Discussions:- Taxation - opportunity cost of capital and tax rate given, Assignment Help, Ask Question on Taxation - opportunity cost of capital and tax rate given, Get Answer, Expert's Help, Taxation - opportunity cost of capital and tax rate given Discussions

Write discussion on Taxation - opportunity cost of capital and tax rate given
Your posts are moderated
Related Questions
John Alan Kelly and Rosalyn Elaine Kelly, a married couple, live at 3822 Robin Lane Houston, Texas 77049-7236.  Their home telephone number is (713) 468-9721, home fax number is (7

there is customer invoice booked with cst 2% (tru AFP) and now the customer says he wont provide c from.. so now we hv to charge extra 3% cst.. how to book this

It is a tax based on the assessed value of personal property or real estate. Ad valorem taxes can be property taxes or even duty that is levied on imported items. Property ad valor

how to compute income tax

Complete the following problems located in Taxation of Individuals and Business Entities: • Comprehensive Problem 67 (Ch. 5) using Microsoft Excel, except prepare the computations

How much is for the Roberta Santos taxation assignment?

Macy had a lot of medical expenses this year that were not covered by her insurance (either due to a deductible, co-insurance, or co-pay). Her un-reimbursed qualifying medical expe

Pension from former employer $39,850, Interest income from Alto Nationl Bank 5,500, Interest income on City of Alto bonds 4,500, Dividends received from IBM 2,000, Collection

Alan is an employee at ABC Pty Ltd (ABC). He has negotiated the following remuneration package with ABC: • salary of $300,000; • Payment of Alan''s mobile phone bill ($220 per mont

#queTonya had the following items for last year: Salary $40,000 Short-term capital gain 12,000 Nonbusiness bad debt (25,000) Long-term capital gain 8,000 For the current year, Tony