Albatross airlines is evaluating the acquisition of a new, Ask an Expert

Finance

Albatross Airlines is evaluating the acquisition of a new aeroplane. Its price is $40,000, it qualifies for a 6% investment tax credit and it will be in CCA class 9 (25%). Purchase of the new plane would require an increase in net working capital by $2,000; before-tax revenues by $20,000 per year and operating costs by $5,000 per year. The plane will be used for 3 years and then be sold for $25,000. The firm's marginal tax rate is 40%, and the project's cost of capital is 14%.

Required:

What is the project's net present value?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M944843

Have any Question?

Related Questions in Basic Finance

You are are evaluating a project that costs 1140000 has a

You are are evaluating a project that costs $1,140,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 54,000 units p ...

Based on land minerals and natural resources labor and

Based on land, minerals and natural resources, labor and entrepreneurial innovation, which country do you feel has the greatest long-term potential China or Russia.

Please help me study for a test by helping me with this

Please help me study for a test by helping me with this question. Please show work/formulas used and accuracy really matters. Thanks. What is the APR on a loan from American Pride Payday Loan Store? You've borrowed $200, ...

The reports delivered to those engaged in carrying out or

The reports delivered to those engaged in carrying out or managing the project should be timed to allow control to be exercised before completion of the task in question. Describe exception reports versus special analysi ...

You are bearish on telecom and decide to sell short 100

You are bearish on Telecom and decide to sell short 100 shares at the current market price of $47 per share. a. How much in cash or securities must you put into your brokerage account if the broker's initial margin requi ...

If you take out a 15-year loan in the amount of 370000 at 7

If you take out a 15-year loan in the amount of $370,000 at 7 percent rate annually. The loan is to be paid off by equal monthly installments over 15 years. Draw an amortization table showing the beginning balance, total ...

We have the following investments in our

We have the following investments in our portfolio: Investment Amount Expected Return Beta A Stock $2,000 ...

Since opening your new retail business you have found

Since opening your new retail business, you have found yourself steadily diversifying your product offering and thereby expanding your inventory - a practice commonly referred to as line extension. Cash is running short ...

Squash delight inc has the following balance

Squash Delight Inc. has the following balance sheet: Assets Cash $ 45,000 Accounts receivable 295,000 Fixed assets 772,000 Total assets $ 1,112,000 Liabilities Accounts payable $ 296,000 ...

What is the value of an investment that pays 25000

What is the value of an investment that pays $25,000 every other year forever, if the first payment occurs one year from today and the discount rate is 9 percent compounded daily? What is the value today if the first p ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert