What is the maximum purchase price the company can pay

Assignment Help Econometrics
Reference no: EM13224780

A company is considering the purchase of tractor units that will yield benefits of $10,000 for year 1, $15,000 for year 2, $20,000 for year 3, $20,000 for year 4, and $20,000 for year 5. The depreciation system used by company is MACRS-GDS, and the effective tax rate is 34%. The company believes that the tractor units can be sold at the end of five years of use for 25% of the original purchase price. What is the maximum purchase price the company can pay for the tractor if it's after tax MARR is 12% per year?

Reference no: EM13224780

Questions Cloud

Compute the weight of potassium chlorate : Calculate the weight of potassium chlorate required to prepare 380 mL of wet oxygen collected over water at 20 Celcius and 750 mm of Hg.
What are the two reasons people wish to hold money : Suppose Aunt Sophie transfers $1,000 to her savings account from her checking account. What happens to the value of M1 and to M2 Suppose Uncle Nacho sells shares of Time Warner stock for $20,000 and puts the proceeds from the sale
Compute the molecular weight of a gaseous : Calculate the molecular weight of a gaseous compound if 0.75 gram occupies a volume of 336 mL at STP
State equilibrium the mixture contains a high concentration : values for an equlibruim constant suggests that at equilibrium the mixture contains a high concentration of products?
What is the maximum purchase price the company can pay : A company is considering the purchase of tractor units that will yield benefits of $10,000 for year 1, $15,000 for year 2, $20,000 for year 3, $20,000 for year 4, and $20,000 for year 5. The depreciation system used by company is MACRS-GDS, and th..
Explain the initial concentration of the reactant : A chemical reaction that is first order with respect to the reactant is observed to have a rate constant of 1.2 x 10^-2s^-1. If the initial concentration of this reactant is 2.0 M, what is the concentration after 200s?
Which pizza-baking oven would you select and why : Mamma Mia's Pizza must replace its current pizza-baking oven. The two best alternatives are Crispy Cruster and Easy Baker. Assume an income tax rate of 50% and MARR after-taxes of 10% per year. Which pizza-baking oven would you select and why
Discuss the impact of the internet on the five stages : Discuss the impact of the internet on the five stages of the CDM process. What happens differently, or how does the internet use these processes to sell more efficiently?
Do the actions change depending on the industry : Discuss actions you could take to bring more players into an existing strategic "game."

Reviews

Write a Review

Econometrics Questions & Answers

  What is the minimum level of the price of x1 compatible

the utility function (x1,x2)= (x1+1)(x2+4). The price of x2 is $1. Lee spends all his income to buy 6 units of x2 and no x1. What is the minimum level of the price of x1 compatible with these facts

  Calculate the accounting profit and the economic profit

Gomez runs a small pottery firm. He hires one helper at $11,500 per year, pays annual rent of $7,000 for his shop, and spends $22,500 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth..

  Calculate the velocity of circulation and nominal gdp

If quantity of money is $3 trillion, real GDP is $10 trillion, the price level is ..09, the real interest rate 2 percent a year, and the nominal interest rate is 7 percent a year, calculate the velocity of circulation, the value M times V, and nom..

  What are consumption and saving in each period

What are consumption and saving in each period, assuming no borrowing constraints? What happens if the consumer faces a borrowing constraint that prevents her from borrowing?

  How much firm will produce in a perfectly competitive market

A firm in a perfectly competitive market will produce 0 output in the short run if the price in below $20 but will produce if the price is above $20. The smallest quantity they will produce in the short run is 6. The minimum of ATC is $447.75

  Find coefficient of determination

The information in the table given below are the results of a random sample of current home sales in your neighborhood that your boss has asked you to use to estimate relationship in selling price of house and number of square feet in it.

  Determine the aggregate marginal cost function

Alchem (L) is the price leader in the polyglue market. All 10 other manufactures (follower (F) firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the r..

  Determine the equilibrium price and quantity

In a given marker, demand is described by the equation QD=1800-10P and supply is described by QS=200+10P. A. Determine the equilibrium price and quantity. B. Determine the surplus or shortage that would exist if the price was set at $60 by the state.

  Derive an expression for the marginal product of labor

Consider a Cobb-Douglas production function with three inputs, K is the capital(number of machines), L is labor (nuber of workers) and H is human capital (the number of college degrees among workers) The production fucntion isY=K1/3 L1/3 H1/3

  What is the maximum amount jones is willing to pay

The rental fees are $300 per month for single bedrooms, and $420 per month for doubles. Smith is a smoker and would be willing to give up $250 per month rather than give up being able to smoke at home.

  What is the highest rate the student can accept

A student wants to buy a car. The car's sticker price is $24,000. The student cannot afford the dealer's terms - 12% interest for 60 months, because the student only has a $500 monthly disposable income. What is the highest rate the studen..

  What is the equivalent uniform annual cost of the 20-year

Maintenance expenditures for a structure with a 20-year life will come as periodic outlays for overhaul of $4,000 at the end of the 5th year, $6,000 at the end of the 10th year, and $7,500 at the end of the 15th year. With interest at 8%, what is ..

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