Good investment on an after-tax basis

Assignment Help Business Economics

Reference no: EM131810403

Fleet Fleet rental car company purchased 10 new cars for a total cost of $180,000. The cars generated income of $150,000 per year and incurred operating expenses of $60,000 per year. The company uses MACRS depreciation and its marginal tax rate is 40% (Note: Per IRS regulations, cars have a class life of 5 years). The 10 cars were sold at the end of the third year for a total of $75,000. Assuming a MARR of 10% and using NPW, determine if this was a good investment on an after-tax basis. Contributed by Mukasa Ssemakula, Wayne State University.

Reference no: EM131810403

Questions Cloud

Assemble widgets has kept pace with inflation : The cost of machinery used to assemble widgets has kept pace with inflation. Using Exhibit 15.1, calculate the cost, in 2001 dollars

Find the expected cash balance at the end of april : Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). Calculate the expected cash balance at the end of April

Why would you make or buy plain cakes from nausori bakery : If you are the manager of Laucala branch, would you make or buy plain cakes from Nausori Bakery? Show all necessary calculations.

Determine the after-tax net present worth of assets : The company uses an after-tax MARR rate of 12% and is in the 35% tax bracket. Determine the after-tax net present worth of this asset over the 5-year service pe

Good investment on an after-tax basis : determine if this was a good investment on an after-tax basis. Contributed by Mukasa Ssemakula, Wayne State University.

What is the company contribution margin ratio : The company has no beginning or ending inventories and produced and sold 10,500 units during the month. What is the company's contribution margin ratio

Prepare a process costing departmental production report : Prepare a process costing departmental production report for the department using the weighted-average method. Round the cost per unit to the nearest cent.

Investor after-tax rate of return : Assuming MACRS depreciation and an income tax rate of 50%, determine the investor's after-tax rate of return on this investment.

Determine the present worth of the after-tax : If the facility opens in the month of March and sales are as shown, determine the present worth of the after-tax cash flows for the first 5 years

User Account

All Pages