One division of your company restores old antique vehicles.  For example, the company just bought an old car for $23,000 and guesses that they can sell the car for $46,000 in 3 years after a few repairs and after they take the vehicle to some car shows etc.  They think the cost of fixing the car will be about $2,000 each year for the next 3 years.  One employee, Roger, thinks that there is no use in claiming CCA (depreciation) over the next 3 years as the selling price will be higher than the purchase price.  Harpeet, however, says that even though CCA recapture and or capital gains will likely have to be paid, it will still be worth claiming CCA on this antique vehicle each year.  Who is correct, and why? (hint: develop a very simple income statement/cash flow statement for each scenario).    Make sure to justify your answer with detailed calculations.  MARR is 10%, and the tax rate is 40%.  The CCA rate is 30%

Blooper Industries must replace its magnoosium purification system. Quick & Dirty Systems sells a relatively cheap purification system for $20 million. The system will last 5 years. Do-It-Right sells a sturdier but more expensive system for $21 million; it will last for 6 years. Both systems entail $1 million in operating costs; both will be depreciated straight- line to a final value of zero over their useful lives; neither will have any salvage value at the end of its life. The firm's tax rate is 30%, and the discount rate is 13%. a. What is the equivalent annual cost of investing in the cheap system? Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 2 decimal places. b. What is the equivalent annual cost of investing in the more expensive system? Note: Do not round intermediate calculations. Enter your answer as a positive value. Enter your answer in millions rounded to 2 decimal places. c. Which system…

Rakesh

Carla Vista Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Carla Vista Roofing spent $77,400 refurbishing the lift. It has just determined that another $45,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $194,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $110,000 to $84,200 each year. Carla Vista Roofing could also rent out the new lift for about $11,500 per year. The old lift is not suitable for rental. The old lift.could currently be sold for $28,500 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using…