A “capital investment” Tug has the following current and projected cash flows during the recovery period. Using MACRS depreciation with half-year convention, what will be the present value of its cash flow after taxes in year three? Initial Cost ($) $350,000 Revenue ($/yr) $150,000 Maintenance ($/yr) $20,000 Tax Rate 40% Market Rate 5% Inflation Rate 4% MACRs for tugs are 5
A “capital investment” Tug has the following current and projected cash flows during the recovery period. Using MACRS depreciation with half-year convention, what will be the present value of its cash flow after taxes in year three? Initial Cost ($) $350,000 Revenue ($/yr) $150,000 Maintenance ($/yr) $20,000 Tax Rate 40% Market Rate 5% Inflation Rate 4% MACRs for tugs are 5
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A “capital investment” Tug has the following current and projected cash flows during the recovery period. Using MACRS
| Initial Cost ($) | $350,000 |
| Revenue ($/yr) | $150,000 |
| Maintenance ($/yr) | $20,000 |
| Tax Rate | 40% |
| Market Rate | 5% |
| Inflation Rate | 4% |
MACRs for tugs are 5
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