You have been asked by the president of your company to evaluate the

You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck.
 The truck’s basic price is $50,000, and it will cost another $10,000 to modify it for
special use by your firm.  The truck falls into the MACRS five-year class {MACRS rates as percentages: 20, 32,
19, 12, 11, 6}, and will be sold after two years for $40,000.  Use of the truck will require an increase in net working capital (spare parts inventory) of $2,000.  The truck will have no effect on revenues, but it is expected to save the firm $20,000 per year in before-tax operating costs, mainly labor.
 The firm’s marginal tax rate is 40%.
 The firm’s capital structure is 50% debt & 50% equity. They calculate their WACC to be
9.0% using the following inputs: before-tax cost of debt-10%, cost of equity-12%, expected market return-12%, risk-free rate-4%, beta-1.0.
a) What is the net investment in the truck project? (That is, what is the Year 0 net cash
flow?)
b) What is the operating cash flows in Year 1 & 2?
c) What is the NPV of this project?

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

STAY HOME, SAVE LIVES. Order your essay today and save 20% with the discount code ATOM