Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Your company is contemplating replacing their current fleet of delivery vehicles with Nissan NV vans. You will be replacing 5 fully-
depreciated vans, which you think you can sell for $3,100 a piece and which you could probably use for another 2 years if you chose
not to replace them. The NV vans will cost $30,000 each in the configuration you want them, and can be depreciated using MACRS
over a 5-year life, but you are unable to make use of either bonus depreciation or Section 179 expensing. Expected yearly before-tax
cash savings due to acquiring the new vans amounts to about $3,800 each. If your cost of capital is 10 percent and your firm faces a 21
percent tax rate, what will the cash flows for this project be? (Round your answers to the nearest dollar amount.)
FCF
Year
1
6
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