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
83. Dawn Taylor is currently employed by the state Chamber of Commerce. While she enjoys the relatively short workweeks, she eventually would like to work for herself rather than f

how are trusts considered a tax minimisation vehicle?

Hi Dear, Could you please do the online exam for ( Tax Individuals US). The exam will be ( short answers and MC ). The exam will open about one and half to two hours. The exam wil

Simon works as a chiropractor for a small partnership of three other professionals who employ him to work in the office four days each week. Simon earns over $90,000 per year. Eac

a.  Which type of ripple marks would you expect to see on the bed of a river? Why? b.  Which type would you expect to find on the floor of a standing body of water? Why? c.

Required: ? Use the following information to complete Phillip and Claire Dunphy's 2012 federal income tax return. If information is missing, use reasonable assumptions to fil

The Diamond Glitter Company is in the process of preparing its financial statements for 2012. Assume that no entries for depreciation have been recorded in 2012. The following info

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

An expatriation tax is a tax on somebody who gives up their citizenship. In United States, the expatriation tax provisions under Section 877 and Section 877A of the Internal Revenu

You have been offered a unique investment opportunity today; you will receive $500 one year from now. If you invest $10,000 today, you will receive $500 one year from now, $1500 tw