George Kaplan is considering adding a new crop-dusting plane to his fleet at North Corn Corner, Inc. The new plane will cost $85,000. He anticipates spending an additional $20,000 immediately after the purchase to modify it for crop-dusting. Kaplan plans to use the plane for five years and then sell it. He estimates that the salvage value will be $20,000. With the addition of the new plane, Kaplan estimates revenue in the first year will increase by 10 percent over last year. Revenue last year was $125,000. Other first-year expenses are also expected to increase. Operating expenses will increase by $20,000, and depreciation expense will increase by $10,500. Kaplan's marginal tax rate is 40 percent. For capital budgeting purposes, what is the net cost of the plane? Or, stated another way, what is the initial net cash flow?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “George Kaplan is considering adding a new crop-dusting plane to his fleet at North Corn Corner, Inc. The new plane will cost $85,000. He ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Because of multiple physical injuries and emotional concerns, a hospitalized client is at high risk to develop a stress ulcer (Curling). Which of these is evidence of a stress ulcer?
Answers (1)
What type of international trade balance or scenario have both mercantilism and neo-mercantilists been preoccupied or obsessed with obtaining?
Answers (1)
Canister Industries uses labor hours to apply variable overhead to production. If the company's workers were very inefficient during the period, which of the following statements would be true about the variable-overhead efficiency variance?
Answers (1)
Which of the following policies is most likely to encourage innovation, higher quality goods, and lower prices? a. Encouraging public-private partnerships b. Passing government regulations to reduce business failures and protect consumers c.
Answers (1)
Wanda Workout stopped at the local store to purchase a drink after her strenuous jog that morning. She purchased a large drink from Kelly. An hour later, Wanda did not feel well and started to get sick.
Answers (1)
New Questions in Business
The Target Corporation purchased a larger freezer to hold its frozen foods and frozen desserts that it sells on a regular basis. The cost of the equipment was $50,000 and is expected to be useful for only 10 years.
Answers (1)
Nicholas earned 10.5% in his savings account. if he is in the 31% tax bracket, what is his after-tax savings rate of return?
Answers (1)
Which business partnership began by selling watches by mail? ben and jerry?
Answers (1)
When politicians commit to making a large future expenditure without simultaneously committing to collect enough taxes to pay for it, this is an example of a/an A. Budget deficit. B. Unfunded liability. C. Political corruption. D. Debt crisis
Answers (1)
LO 3.4A company sells two products, Model 101 and Model 202. For every one unit of Model 101, they sell they sell two units of Model 202. Sales and cost information for the two products is shown.
Answers (1)