What is the annual revenue required by company from contract

Assignment Help Corporate Finance
Reference no: EM13333946

Your company operates a fleet of light trucks that are used to provide contract delivery services. As the engineering and technical manager, you are analyzing the purchase of 55 new trucks as an addition to the fleet. These trucks would be used for a new contract the sales staff is trying to obtain. If purchased, the trucks would cost $21,200 each; estimated use is 20,000 miles per year per truck; estimated operation and maintenance and other related expenses (zero-year dollars) are $0.45 per mile, which is forecasted to increase at the rate of 5% per year; and the trucks are MACRS (GDS) three-year property class assets. The analysis period is four years; t = 38%; MARR =15% per year (after taxes; includes an inflation component); and the estimated MV at the end of four years (in year-zero dollars) is 35% of the purchase price of the vehicles. This estimate is expected to increase at the rate of 2% per year.

Based on an after-tax, actual-dollar analysis, what is the annual revenue required by your company from the contract to justify these expenditures before any profit is considered? This calculated amount for annual revenue is the breakeven point between purchasing the trucks and which other alternative?

Reference no: EM13333946

Questions Cloud

Explain zincon detection of zinc and copper : For detection using Fluozin-3, what is the excitation wavelength that should be used. For Zincon detection of zinc and copper, what pH range agent do, and why would it be useful for metal detection
Principles of financial accounting : Articulation of financial statements.
Find the translational kinetic energy of the center of mass : Two automobiles, each of mass 1.500*10^3 kg, travel in the same direction along a straight road. find the translational kinetic energy of the center of mass
Johnson corp. has an 8% required rate of return : Johnson Corp. has an 8% required rate of return. It's considering a project that would provide annual cost savings of $50,000 for 5 years. The most that Johnson would be willing to spend on this project is
What is the annual revenue required by company from contract : Your company operates a fleet of light trucks that are used to provide contract delivery services. As the engineering and technical manager, you are analyzing the purchase of 55 new trucks as an addition to the fleet.
Determine the two gaseous equilibria : Consider the two gaseous equilibria- SO2(g) + 1/2O2(g) SO3(g) K1 2SO3(g) SO2(g) + O2(g) K2 The values of the equilibrium constants K1 and K2 are related
Obtain the direction of the magnetic field : A group of particles is traveling in a magnetic field of unknown magnitude and direction. What is the direction of the magnetic field
Determine how will donut shop s eps be effected : Executives of the Donut Shop have determined that the company s DOL is 3X and its DFL is 6X. According to this information, how will Donut Shop s EPS be effected if its amount of EBIT turns out to be 4 percent higher than expected
Prepare the adjusting en- try for depreciation : Prepare the adjusting en- try for depreciation at December 31, post the adjustments to T accounts, and indicate the balance sheet presentation of the equipment at December 31

Reviews

Write a Review

Corporate Finance Questions & Answers

  Prepare the final accounts of a trader

During the year Bills Receivable received were $30,000; $6,000 of which are endo$ed in favour of creditor, of the later a bill for $ 1,200 was dishonoured.

  Determine annual interest rate for loan

Find the yearly interest rate for your loan using data from local bank or an internet add Decrease this rate by 2 percent. This is r, but expressed as a decimal.

  What was the cash flow from operating activities

If accruals increased by $25,000, receivables and inventories increased by $85,000, and depreciation and amortization totaled $35,000, what was the firm's net income?

  Compute the debt to equity ratios

Considering the following three companies:  i) eBay ii) The Clorox Company (CLX) iii) Alaska Air Group, Inc. (NYS: ALK).

  Discuss impact on savings burden in investment markets

Why does the tax value for an inclusive us tax that is created to replace an equal-yield comprehensive income tax have to be higher than income tax rate?

  How will the current balance-of-payments position

How will the current balance-of-payments position of the country affect its equity and debt markets in the short term?

  Liability or part of stockholders equity

Indicate whether each of these items is an asset (A), a liability (L), or part of stockholders" equity (SE). (a) Accounts receivable. (b) Salaries and wages payable.

  Write a brief description about the company

Write a brief description about the company you chose and also talk about how it meets the conditions just mentioned - Find your company go to the Toronto Stock Exchange website, and in the drop down menu below "ABOUT TMX GROUP" choose "Listed Compa..

  Find pension expense

The following information based on the operation of the plan for the year 2010 in which no profits were paid.

  Interest for each firm with the increased sales

What is the operating income (EBIT) for both firms and what are the earnings after interest for each firm - interest for each firm with the increased sales

  Finding additional financing

ICU has current assets of $800,000 and net fixed assets of $1,400,000. The company expects its sales to climb 25% next year from its current level of $3,500,000.

  Compute the amount of receives

The CFO asks you to compute the amount of $X receives on the €5 Million it receives today at the current $1.30/€1 exchange rate.

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