with calculations and reason Question 5.3,price is $120,000, and an additional $30,000 is required to modify the equipment for special useby the company. The truck falls into the MACRS seven-year classification (the tax life), and itwill be sold after five years (the project life) for $55,000. The purchase of the truck will have noeffect on revenues, but it is expected to save the firm $65,000 per year in before-tax operatingcosts, mainly labor. The firm's marginal tax rate is 20%. Assume that the initial investment is tobe financed by a bank loan at an interest rate of 10% payable annually. Determine the after-taxcash flows and the net present worth of the investment for this project if the firm's MARR isknown to be 15%.A company considerings acquiring a new heavy-duty truck. The purchaseA) $118,059B) $133,600C) $90,022D) Answers A, B and C are not correct

Option D is correct Reason - Compuation of Net Present Value Savings in cost , For labour cost=…

Answered: cash flows and the net present worth of…

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cash flows and the net present worth of the investment for this project if the firm's MARR is known to be 15%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 13P

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