Two years ago the krusty krab restaurant purchased a grill

Assignment Help Corporate Finance

Reference no: EM13363784

Two years ago the Krusty Krab Restaurant purchased a grill for $50,000. The owner, Eugene Krabs, has learned that a new grill is available that will cook Krabby Patties twice as fast as the existing grill. This new grill can be purchased for $80,000 and would be depreciated straight line over 8 years, after which it would have no salvage value. Eugene Krab expects that the new grill will produce EBITDA of $50,000 per year for the next eight years while the existing grill produces EBITDA of only $35,000 per year. The current grill is being depreciated straight line over its useful life of 10 years after which it will have no salvage value. All other operating expenses are identical for both grills. The existing grill can be sold to another restaurant now $30,000. The Krusty Krab's tax rate is 35%.

Reference no: EM13363784

Questions Cloud

Today many companies face budgetary challenges on a : today many companies face budgetary challenges on a continual basis. two critical aspects that businesses lack are

Walmarts weighted average cost of capital was given the : walmarts weighted average cost of capital was given the following assumptions.beta 0.4230-year us treasurybond rate

Pick an mnc that currently does not do business in india : pick an mnc that currently does not do business in india. then consider what steps this company should explore to

Xiao li wishes to accumulate 50000 by the end of 10 years : xiao li wishes to accumulate 50000 by the end of 10 years by making equal annual end-of-year deposits over the next 10

Two years ago the krusty krab restaurant purchased a grill : two years ago the krusty krab restaurant purchased a grill for 50000. the owner eugene krabs has learned that a new

1 why did the proportion of equities in long-term funds : 1. why did the proportion of equities in long-term funds increase from 38.3 percentnbsp in 1990 to over 70 percent by

Store driven forecast the home depot is a leading specialty : store driven forecast. the home depot is a leading specialty retailer of hardware and home improvement products and is

Projecting gross profit the effects of volume versus price : projecting gross profit the effects of volume versus price. suppose you are analyzing a firm that is successfully

Consider the statement strategy analysis seems to be an : consider the statement strategy analysis seems to be an unnecessary detour in doing financial statement analysis. why

User Account

All Pages